
Book i \£-l£l 

Copyright^ 

COPYRIGHT DEFOSm 



EXPORTING TO THE WORLD 




XPORTING 

TO THE WORLD 



A Manual of Practical Export 
for All Who Are Interested 
or Engaged in Foreign Trade 



BY 

A. A. PREGIADO 

Former Director of the United States Government Committee 
in the Republic of Chile, Author of "America's Monopoly in 
Latin-American Trade," "Foreign Trade a Necessity, " "How 
Export Shipments Are Financed" etc. 



NEW YORK 

THE JAMES A. McGANN COMPANY 

1920 



0^ 



Copyrighted, 1920 

By 

The James A. McCann Company 



All Rights Reserved 



Printed in the U. S. A. 

OCT 29 1920 
CI.A601390 



An Arkwimlpfcgmettt 

In the preparation of this volume the author is indebted 
to a number of organizations and individuals whose aid and 
co-operation have been of inestimable value. I refer to 

The National City Bank, New York City. 

The Irving National Bank, New York City. 

The Guarantee Trust Co., New York City. 

The National Foreign Trade Council. 

The Business Training Corporation. 

The American Manufacturers' Export Association. 

The Pan-American Union, Washington, D. C. 

The Department of Commerce. 

Frank B. Hall & Co. 

Dr. E. E. Pratt 

Mr. D. E. Delgado. 

Mr. Maximilian Aviles. 

Mr. J. W. Sanger. 

Mr. John Walsh. 

Mr. Gilbert H. Montague. 

Mr. Archibald J. Wolfe. 

Mr. O. K. Davis. 

Mr. W. J. Riley. 

Mr. John E. Gardine 

Mr. James H. Carter. 

Mr. Albert E. Parker. 



TABLE OF CONTENTS 



Page 
INTRODUCTION xiii 

Chapter I 

PRINCIPLES OF EXPORT TRADE 1 

Exporting not as difficult as many suppose it 
to be. Same business principles govern world 
over. Unfamiliar conditions in exporting must - 
be met. Success in exporting is measured by 
seriousness. 

Chapter II 

PROBLEMS CONFRONTING THE EXPORTER .... 6 

Problems confronting the Exporter. Study of 
market conditions an essential requirement 
Some factors governing export trade. Manufac- 
turer's aim should be to please the customer. 
Quality, not prices, determines success. Other 
factors that govern export trade. 

Chapter III 

METHODS OF EXPORTING IT 

Selling methods involved in exporting direct. 
Using travelling men to develop trade. Develop- 
ing trade by correspondence. Advertising as a 
means of developing business. The Export 
Commission house as an exporter. The export 
merchant. 

Chapter IV 

ORGANIZATION OF EXPORT DEPARTMENT .... 24 

Export department need not be an expensive 
affair. Selecting an export manager for the 
business. Some one in authority as executive 
head. Where is export department to be estab- 
lished? Essential units in export department. 

vii 



viii CONTENTS 

Chapter V 

Pasre 

THE TRAVELLING SALESMAN OVERSEAS 36 

Manufacturer judged by man in the field. 
Necessary qualifications of travelling salesman 
abroad. Preparations necessary for trip abroad. 
Expenses of travelling salesman. Licenses re- 
quired in foreign countries. The combination 
travelling salesman. 

Chapter VI 

CORRESPONDENCE IN EXPORT TRADE 58 

Essentials in export correspondence. Careful 
translators necessary. Same language differs in 
various countries. Parcel post as means of de- 
veloping business through correspondence. 

Chapter VII 

ADVERTISING IN EXPORT TRADE 74 

Necessity of American advertising in foreign 
fields. Advertising media at home and abroad. 
Copy for foreign countries. How the export cata- 
logues should be prepared and distributed. 
Duties on catalogues. 



& 



Chapter VIII 

EXPORT HOUSES 90 

The export merchant. The export commission 
house. How export houses operate in foreign 
fields. Advantages and disadvantages of export 
houses. Future of export commission houses. 

Chapter IX 

FOREIGN SALES ORGANIZATIONS 107 

Advantages of local foreign sales agent. Differ- 
ent functions of local foreign sales agents* Man- 
ufacturer's arrangements with local foreign sales 
agents. Foreign branches as selling agencies. 

Chapter X 

j COMBINATIONS IN FOREIGN TRADE . . 114 

The Webb-Pomerene Law. Criticism and de- 
fense of Webb-Pomerene law. Provisions of the 
measure. How combinations are made under 
the Webb-Pomerene law. 



CONTENTS ix 

Chapter XI p 

HOW TO QUOTE PRICES 142 

"One price to all" poor policy. System of dis- 
counts should be flexible. Quoting prices in 
American currency. Quotation symbols must 
not be confused. Meaning of different symbols. 
Methods of computing C. I. F. prices. Terms 
upon which goods are sold. 

Chapter XII 

FOREIGN CREDITS 160 

Human nature same the world over. Why 
manufacturers refuse to extend credit overseas. 
History of credit in foreign business. Credit in- 
formation not difficult to obtain. What is neces- 
sary in credit information. Long credits not 
necessary in export trade. How to collect over- 
due accounts in foreign field. 

Chapter XIII 
HANDLING AN ORDER 201 

Method of handling orders determines manu- 
facturer's success. Customer's instructions must 
be closely followed. Confidence of foreign 
customer must be won. Executive ability in 
handling orders. 

Chapter XIV 

PACKING FOR EXPORT 211 

Inexperienced exporters are to blame for poor 
packing. Merchandise must be securely packed. 
Poor packing means loss of orders. Factors to 
be considered in packing for export. Kind of 
packing required for shipments for export. How 
machinery is packed for shipment. Foreign 
requirements must be met in packing. Effect 
of weight on customs duties. Regulations in 
countries that may affect packing. How cases 
for export should be marked. 

Chapter XV 
HOW SHIPMENTS ARE MADE 229 

Method of shipping goods from interior. 
Routine involved in shipment. Documents 
required. How bills of lading are made out. 
Shipowner's liability to the shipper. Consular 
invoices. Special regulations in various countries. 



x CONTENTS 

Chapter XVI 

Page 
THE FOREIGN FREIGHT FORWARDER 243 

Foreign freight forwarder must be well in- 
formed. Forwarder should have his own ware- 
houses. How foreign freight forwarder operates. 
Methods differ on the Atlantic side. Large con- 
cerns use freight forwarders. What forwarder 
charges for his service. Advantages of freight 
forwarders. Criticism against forwarding busi- 
ness. 

Chapter XVII 

MARINE INSURANCE 252 

History of "underwriters." Principles of 
Marine Insurance. What is written in Marine 
Insurance policy. Explanation of clauses in 
Marine Insurance policy. How Marine Insur- 
ance is to be taken out. General and particular 
average in Marine Insurance. 

Chapter XVIII 

HOW ORDERS ARE FINANCED 274 

American Exporters have always enjoyed 
good banking facilities. Methods of financing 
shipments for export. Selling goods on open 
credit basis. How commercial credits are opened. 
Acceptance credits. Bills of exchange or drafts. 

Chapter XIX 

AMERICAN BANKS IN FOREIGN TRADE AND 

FOREIGN INVESTMENTS 299 

Foreign branches of American banks. There is 
limit to bank's co-operation. Federal Reserve law 
permits foreign branches. Credit information 
available to client. How bank advances money 
against shipments. The foreign trade department 
of a bank. How banks extend credit. The Edge 
Act to extend long credits. How corporations 
may be formed under Edge Act. Making in- 
vestments in foreign countries. Foreign invest- 
ments create permanent market. 



CONTENTS xi 

Chapter XX Page 
OUR MERCHANT MARINE 333 

Europe's advantage in ship tonnage. Spectac- 
ular growth of Merchant Marine. How other 
countries suffered during war. Ocean routes that 
vessels follow. History of American Merchant 
Marine. Government activities in shipping in- 
dustry. Future of American Merchant Marine. 

Chapter XXI 

HOW GOVERNMENT HELPS EXPORTER 349 

Reports of specified products valuable. Reg- 
ular publications of the Bureau. Special bulle- 
tins of the Bureau. Bureau serves as informa- 
tion depot. How district offices may help ex- 
porter. How to use trade opportunity service. 
American consuls as trade representatives. How 
to make use of consular service. Other sources 
of export information. Trade journals must not 
be overlooked. A list of books exporters should 
have on hand. 

Chapter XXII 

THE WORLD'S MARKETS 362 

Latin America, Mexico, West Indies, Central 
America. South America as a field for American 
merchandise. The Near East. The Far East. The 
Commonwealth of Australia. Africa as a market 
for American goods. Europe. Canada. 

Chapter XXIII 

FOREIGN TRADE MARK REQUIREMENTS 387 

Caution. Dangers resulting from neglect. 
Trademark regulations vary in all countries. Re- 
quirements in Code-law countries. How the 
trademark pirate operates. Marks capable of 
registration. Importance of registration. 

Chapter XXIV 

PUBLICITY IN FOREIGN COUNTRIES 398 

American Press associations now active in 
foreign field. Publicity machine should be or- 
ganized. 



&' 



APPENDIX '03 

INDEX 423 



INTRODUCTION 

America is beginning to think internationally. 

We have assumed a new mental attitude towards our neigh- 
bors of other lands and climes. We are learning to deal with 
them, talk with them, think with them, and act with 
them in affairs of international importance. Broadly speaking, 
their affairs are our affairs, for the interests of all are becoming 
so closely allied in world matters that statesmen, with rare fore- 
sight, have seen the necessity of the creation of a concrete 
organization such as The League of Nations, where all matters 
of dispute may be sifted lest from some irresponsible source an 
attempt be made to again compromise the peace of the world. 

Naturally, the United States of America is sharing in this 
intelligent advance toward international peace and good will. 
The Great War has given us the proper inspiration to participate 
more fully in world matters than we have done in the past. We 
have come to realize that such participation — be it commercial, 
political or spiritual — is not only of lasting benefit to the Ameri- 
can people as a whole, but to the world in general. Moreover, it 
is a necessary duty, because of our industrial and economic stabil- 
ity, that we owe to other nations whose development has been 
retarded as the result of conditions peculiar to individual politi- 
cal units. 

We have become a great commercial and industrial power as 
well as a nation of tremendous political influence in world mat- 
ters. We no longer think or act in terms of counties or states or 
sections, but in terms of nations and continents. We are no 
longer satisfied in confining our activities and thoughts within 
the boundaries of the geographical position we occupy on this 
hemisphere. We want to spread out. We want to widen our 
activities. We want to lengthen our vision. We want to become 
acquainted with our neighbors on this earth. 

Before the war Europe furnished great quantities of supplies 
to the rest of the world. The wares of Germany, England, 
France, Belgium and Italy vied with one another on the shelves 
of foreign buyers. Europe was a great market place. It is none 
the less true, however, that we, also, shared a large amount of 

xiii 



INTRODUCTION 

this business with our competitors overseas ; .but the magnitude 
of our commercial activities at home, of which we were thor- 
oughly proud, produced an atmosphere of self-satisfaction so 
dense that few of us really knew, much less cared, how large our 
foreign business had really grown. 

General ignorance of our export trade volume has inspired 
many to say that "the United States is not an exporting nation," 
and that "we can never compete with the pioneer exporting 
nations of the world/' We are not a great exporting nation in 
the sense that Great Britain is because we do not depend for 
our existence on what we sell to the world. England must sell 
to the world in order to live. Her home market is insufficient 
to devour the greater portion of the things she produces. The 
same was true of Germany before the war, of France and Italy 
and Belgium- It was necessary for these nations to market their 
articles in foreign countries because their own consuming popula- 
tions were insufficient. 

The reader's doubts as to America's strength in export trade 
will be removed by the following comparison which is made 
from the statistics of the United States Department of Com- 
merce, July, 1918, referring to the foreign trade of belligerent 
and neutral countries in 1913, a year before the war, which must 
be considered as a normal one: 

Export trade of During 1913 

United States $2,484,018,000 

United Kingdom 3,089,353,000 

France 1,327,882,000 

Germany 2,592,239,000 

Italy 484,746,000 

Japan 314,965,000 

Now let us go back a few years to ascertain America's activi- 
ties in export trade. The following figures, while including the 
exportation of raw material as well as manufactured articles, 
nevertheless serve as a striking illustration of the volume of our 
foreign business for the past fifty years: 

Fiscal Year. Exports. 

1850 $144,375,726 

1875 513,442,711 

1890 857,828,684 

1900 1,394,483,082 

1905 1,518,561,666 

1910 1,744,984,720 

1911 2,049,320,199 

1912 2,204,322,409 

xiv 



INTRODUCTION 

These figures, dry as they may seem, tell the story of a brilliant 
development of foreign markets for American products. They 
refute the argument that this country is not an exporting nation. 
As a matter of fact, ever since 1874 we have been selling to the 
outside world more than we have been buying. 

It is also contended by those who have not made an analysis 
of our export trade that the larger part of this gigantic volume 
is made up of foodstuffs, and other crude materials — that very 
little of it represents manufactured articles. We need only to 
(mote the figures of the United States Department of Commerce 
for a, period prior to the war, as the abnormal conditions during 
the European conflagration should not be referred to in making 
comparisons. 

Taken from a Department of Commerce report published in 
1913 we quote the following: 

"The success of the American manufacturer and the American 
workman in competition in foreign markets is sharply illustrated 
by the fact that the exportation of machinery from the United 
States in the year which ends with June, 1913, will exceed 200 
million dollars, against less than 75 million a decade earlier, an 
increase of nearly 200 per cent., while the total exports mean- 
time were increasing about 72 per cent. 

"One striking feature of this growth is the fact that large 
gains have been made in exports of machinery to the other great 
manufacturing section of the world, Europe. Of metal-working 
machinery, the exports to Europe amounted to 2 3-4 million 
dollars in 1902, and in 1912, 91-3 million; of automobiles, 3-4 
of a million in 1902, and 7 1-2 million in 1912 ; agricultural im- 
plements, 9 million dollars in 1902, 16 million in 1912 ; sewing 
machines, 21-4 million dollars in 1902, nearly 41-2 in 1912; and 
typewriters, 2 1-2 million dollars in 1902, compared with practi- 
cally 8 million in 1912." 

The foregoing figures represent only one division of manu- 
factured articles. Of all our exports in 1880 only 14.78 per cent, 
represented our total manufactured goods, not counting food- 
stuffs. In 1913, however, the increase was phenomenal. In that 
year our manufactured goods represented 48.8 per cent, of our 
total export business. Crude foodstuffs represented 32 per cent, 
of our exports in 1880, but in 1912 a marked decline to 4.6 per 
cent, was shown. Foodstuffs partly or wholly manufactured 
also took a tremendous drop. It is in the export of manufac- 

xv 



INTRODUCTION 

tured articles, therefore, that the United States has shown the 
greatest gain in recent years, even eclipsing the record of such 
manufacturing nations as the United Kingdom, Germany and 
France. 

However, not until the war clouds settled in Europe, and in- 
dustry was forced to close down in that continent did we realize 
the vast possibilities of developing the foreign markets to such 
an extent that we may always maintain a commercial and finan- 
cial supremacy over all competitors. Peoples from other coun- 
tries who had gone to Europe for their supplies in peace time 
now shopped in the United States. Our goods were introduced 
for the first time in many lands where the European brand prac- 
tically had had the right of way. Our commercial travelers for 
the first time set foot in strange countries and influenced strange 
customers to test our lines. Our industrial plants made engines 
of destruction by night, and engines of peace by day. Our wares 
found cargo space in ships that sailed the seven seas. Purchasers 
for American-made goods were now to be found in the commer- 
cial centers of every continent. Our business men began to 
gather at the behest of our government and foreign trade organ- 
izations for the purpose of discussing further plans for intensive 
development of the foreign markets. The government's co- 
operation was assured in the gathering of commercial informa- 
tion, and other necessary data for the use and disposal of Ameri- 
can industry. The study of export trade technique was encour- 
aged in every section of the country. Schools took up the study 
of modern languages. Universities introduced courses in For- 
eign Trade. Newspapers, magazines, trade journals — all joined 
in the popular cry of the day, "Let's go after foreign business." 

The old days are gone- Pre-war conditions — economical, in- 
dustrial, and political — have given away to an awakened inter- 
national conscience. The tremendous shuffle that the terrible 
war caused wreaked havoc with the old order of things. The 
commercial center of gravity that had rested in the United King- 
dom for centuries has now shifted to America. The American 
dollar is becoming as well known the world over as the British 
pound sterling. 

It has been contended that with the establishment of peace in 
Europe the United States will slowly but surely lose her hold on 
those customers who had been accustomed to buying goods in 
the Old World before the war. As these lines are written 

xvi 



INTRODUCTION 

Europe is still in a chaotic stage. In view of the wanton destruc- 
tion that the war wrought it seems doubtful that a rapid return 
to normal conditions is possible — and in this readjustment the 
assistance of the United States is necessary. 

Regardless of the loss of a certain volume of business which 
American manufacturers may experience as Europe returns to 
its peaceful labors, the preservation of a tremendous export trade 
is practically assured for this country. The remarkable growth 
of our exports during the war period has served a double pur- 
pose. It has advertised American-made goods to new customers, 
and it has afforded foreign buyers the opportunity of comparing 
the merits of the brands that come from America with those of 
our competitors. The success which we shall attain in holding 
our share of the world business will depend, not so much upon 
our ability to produce in tremendous quantities, but upon our 
ability to make the superior quality of an American-made article 
the distinguishing characteristic. 

The American "Renaissance" of exporting has drawn thou- 
sands of men from their former labors to new opportunities. 
Manufacturers and merchants are daily looking about for men 
competent to conduct their export trade or to visit foreign terri- 
tories to open up new business. Needless to say, there is a 
scarcity of experienced men in comparison to the great demand 
that exists. To thousands exporting is a new trade that requires 
training and study. This volume is intended to offer practical 
suggestions to manufacturer and merchant as well as to the 
young man who is endeavoring to grasp the export trade "slant" 
so that he may become better equipped to engage in some phase 
of exporting. 

These chapters are based on extensive travel in foreign coun- 
tries as well as on personal investigations that have sent the 
author into the offices of many successful export manufacturers 
who have been extremely generous in offering their experiences 
that they may be of some service to others. 



xvn 



Chapter I 

PRINCIPLES OF EXPORT TRADE 

Exporting not as difficult as many suppose it to be — Same 

business principles govern the world over unfamiliar 

conditions in exporting must be met success in export- 
ing is measured by seriousness. 

American business men who have not ventured into the 
field of exporting are imbued with the false idea that export 
trade involves a business practice distinctly different from 
that at home, that the ordinary rules of conduct peculiar to 
the American business organization must be placed aside 
when a plunge into foreign fields is decided upon, and that 
in order to master export trade technique all customary prin- 
ciples must be dropped so as to begin all over with a clean 
slate. This is not so. The theory that "you cannot teach an 
old dog new tricks" does not apply here. The business man 
who has successfully grasped the principles of doing business 
at home will learn that the mastering of the technique of 
exporting is accompanied with very little difficulty. 

Same Business Principles 
Govern the World Over 

Political boundaries, or different forms of government, or 
distinct climatic conditions do not determine the principles 
that govern commercial practice. The merchant in Canada 
or Java buys goods in order to sell at a profit just like the 
American merchant who is pursuing the same object. A mer- 
chant in Argentina is under a moral and legal obligation to 
pay for a bill of goods purchased in the United States or in 
another country, even though he is subject to the laws of his 
own country only. His obligation to pay is just as binding 
as if he were doing business across the street from the foreign 
merchant who supplied him with the merchandise. The prin- 
ciple that governs a sale in the United States is the same as 
the principle that governs a sale the world over. The heart 

1 



2 EXPORTING TO THE WORLD 

throb of commerce is the "turn over," whether it be in Singa- 
pore or in Quito. The stimulant that influences the "turn- 
over" is quality, utility and price. The merchant depends on 
either of these essentials ordinarily for the success of his busi- 
ness. To sell his goods he must prove quality, and that they 
are of some service to the purchaser. The price must be 
agreeable. The Chinese merchant will not buy an article 
unless that article can be sold to a customer to whom it may 
be of service, or to whom it may have a strong personal ap- 
peal. Neither will be buy unless he is quoted a price that 
will enable him to sell at a profit. These conditions of a pur- 
chase or sale are not subject to the vagaries of boundary lines, 
different languages or distinct customs. 

Exporting Not as Difficult 
as Many Suppose It To Be 

Export trade is not difficult to handle. Neither is it 
charged with such grave mysteries as those who fear to risk 
it may lead one to believe. "How can I do business with a man 
whom I have never seen, and whose methods of doing business 
I do not understand ?" inquires a merchant who receives an 
order from a man in Buenos Aires for machinery. He forgets 
that he is daily selling goods to hundreds of customers he has 
never seen in his own country. He turns down the order, yet the 
very same day he instructs his staff to fill an order for a stranger 
in California who is known to him only through correspondence. 

What frightens the merchant in refusing the order from far- 
away Argentina? 

It is ignorance of the mechanics that would be involved in the 
transaction. It is the risk that he fears he may have to take in 
accepting the order. He knows nothing about Argentina. To 
him it is a strange land. The language is not his own. Shipment 
of goods to a customer thousands of miles away does not appeal 
to him, and the question of payment is disturbing. 

In doing business with a man in California, however, the mer- 
chant corresponds in the English language. He is in close touch 
with his customer, although he may not know him personally. He 
may be able to converse with him over the long distance tele- 
phone or send him a telegram and receive an answer in a com- 
paratively short time. He has an adequate idea of the market 
in that state. He knows how to obtain his money in payment 
for his goods. Although his customer is many miles away he 



PRINCIPLES OF EXPORT TRADE 3 

feels a sense of security from loss because his shipment is subject 
to the same commercial laws with which he is entirely familiar. 
Moreover, he has no customs regulations to worry about. He 
knows only one money standard — and that is the gold standard! 
of the United States. As a rule the American business man is 
conservative when it comes to making radical departures from 
a set policy. Anything that involves the incorporation of new 
details into the routine of the business, and that is not in accord 
with the established procedure, may invite antagonism at first. 
Going in for exporting is not a revolutionary act that decrees 
the death sentence upon the set principles of business at home. 
It is merely the determination to go after new business — to 
broaden the business vision and scope of the American merchant 
or manufacturer by acquiring a knowledge of foreign countries 
and an idea of the possibilities of those countries for the develop- 
ment of American commerce. 

With little study and education on essential details regarding 
foreign trade the merchant who receives an order for machinery 
from Argentina may turn it into cash. He need not worry about 
the difficulty of communicating with his customer. A cable to 
Buenos Aires will reach its destination almost as soon as a tele- 
gram to California. If he wishes to communicate with his 
customer by mail there are any number of competent translators 
at all the principal ports who can handle his correspondence in 
the language required. The collection of money has been re- 
duced to a very simple undertaking within recent years. The. 
principal American banks in all our large cities are fully equipped 
to take charge of collections in countries where the merchant 
may have bills outstanding. 1 It will be seen, therefore, that the 
merchant will experience little or no difficulty in doing business 
with a customer in Argentina in spite of such apparent barriers 
as difference in language, customs and laws. 

Unfamiliar Conditions in 
Exporting Must Be Met 

In venturing into foreign countries in the search of new cus- 

1 — Mr. J. McCurrah, vice-president of the Continental and Commercial Bank, in 
an address before the Sixth National Foreign Trade Convention in Chicago, April 
24th, 1919, said: "A careful analysis of the world's international business will 
show that the percentage of losses on foreign sales has been very much les6 than 
the percentage of losses in domestic transactions. While it is generally understood 
that the American manufacturer must of necessity be prepared to grant longer 
time credits than we have granted in the past, these credits will be readily financed 
by the American banks', if the exporter will give the bank an opportunity to inves- 
tigate the moral and financial standing of the foreign buyer." 



4 EXPORTING TO THE WORLD 

tomers, however, the merchant will learn that before he can make 
any strenuous efforts to develop a given market he must familiar- 
ize himself with a series of details such as have been foreign to 
his business routine in the domestic field. His foreign corre- 
spondence methods may disturb him at the beginning. His busi- 
ness may require correspondence in several different languages. 
This may mean the addition of competent translators to his 
organization. The difficulty of communicating promptly by mail 
with his overseas customer may tempt him to abandon his even 
temper at times. It takes a letter much longer to reach its desti- 
nation in a foreign country than it does at home. 

Each individual country has its own problems. Climatic con- 
ditions may limit the merchant's development of the market if 
he is engaged in selling seasonable goods. He may be forced to 
alter his packing methods in order to meet the requirements of 
his foreign customer. He must determine a price policy. Is he 
to charge more for his commodities in foreign countries or is 
he to make the same charges that he asks his domestic customers 
to meet, or is he to sell at a lower figure than he does at home? 
He must also decide whether he is to give reasonable credit to 
his foreign purchaser — a very important phase of exporting that 
requires early settlement. 2 The method of obtaining payment for 
his goods may confuse him to some extent, but as has already 
been stated, investigation and study of existing ways and means 
will convince the merchant that it is not as difficult as it may 
seem. He will learn, also, of new money values, and that the 
American dollar does not always maintain its par value in foreign 
countries. He will also become familiar with shipping details 
such as are peculiar to maritime commerce only. These are only a 

2 — "To ascribe the reluctance of many /.merican manufacturers to grant to 
foreign customers credit tenms, regarded by t/he latter as reasonable, to 'ignorance' 
is unfair in many cases. It has, indeed, happened that a manufacturer has refused 
to accommodate in the matter of credit a house of absolutely assured standing 
simply because 'cash against documents in New York' is his rule, but most Ameri- 
can manufacturers declining to do business abroad on a credit basis do so because 
they feel that in some way or other they are not equipped for this class of business. 
The difficulty of obtaining reliable credit information regarding the financial stand- 
ing of foreign customers, the danger of not receiving a sufficiently timely warning 
of any change in tiheir financial condition, the fear of unfounded complaints, un- 
warranted deductions and unreasonable delays in payment, the impossibility of 
obtaining justice in commercial litigation in certain undeveloped countries, and the 
high costs of such litigation in other countries, and, finally, the consideration that 
a manufacturer who has invested his capital in his plant and pjatejits depends 
naturally upon a reasonable speedy return on his investment and cannot undertake 
to finance a large number of importers in foreign countries — all these are weighty 
arguments for prudence." — Archibald J. Wolfe, "Foreign Credits," publication as 
Special Agents Series of tihe Bureau of Foreign and Domestic Commerce, 1913. 



PRINCIPLES OF EXPORT TRADE 5 

few of the new conditions .that will arise in the development of 
the merchant's export business. 

Success in Exporting Is 
Measured by Seriousness 

The seriousness with which the merchant is disposed to enter 
the foreign field, and his willingness to take such risks as he has 
been unfamiliar with at home should be carefully tested before a 
decision to go in for exporting is made. If the merchant's 
seriousness is measured by a desire to "dump" a surplus lot of 
worthless merchandise on an unsuspecting foreign public without 
considering the future consequences, then he had better devote 
his efforts to the home market, where such practices will find 
encouragement in certain sections only. While such "dumping" 
tactics may prove successful the first time in a foreign country, 
disaster will surely follow a second attempt. This does not mean, 
of course, that there are no markets for cheap goods in foreign 
countries. There are several of them. Reference is here made 
to articles of a high competitive character where quality and 
utility are the prime factors that determine their success. The 
workmanship of these should not be sacrificed in order to make 
the price extremely attractive to the foreign purchaser. The 
world should not be a dumping ground for worthless stocks. 
What is not good for the American people should not be good 
for the foreign buyers. To be successful the American manu- 
facturer or merchant must lay down his foundation securely. 
Surely he cannot attain this object by using flimsy material in the 
effort. Competition in foreign markets is keen. The efficiency of 
the American workman is matched against the efficiency of the 
world's greatest artisans. The American workman has proven 
his efficiency. He has proven his ability to make articles of a 
quality that has created a world demand. In order to maintain 
this demand we must continue to produce with the same skill 
that has marked our successes in the past. 



Chapter II 

PROBLEMS CONFRONTING THE EXPORTER 

Study of market conditions an essential requirement — 
Some factors governing export trade — Manufacturer's aim 
should be to please the customer — quality, not prices, de- 
TERMINES success — Other factors that govern export trade 

Before deciding to engage in export trade the manufacturer 
must settle in his own mind a number of matters that may affect 
a final decision. He must decide, first of all, whether he really 
desires to do exporting on a permanent basis. "Shall I stay in 
permanently or shall I stay out permanently?" is a question he 
must be able to answer before taking the first step forward. The 
cumulative value of exporting is the element that must survive 
the acid test. Isolated effort is worse than none at all. Unless 
a manufacturer is in a position to continue exporting on a per- 
manent basis he had better confine himself to the domestic 
market, as spasmodic attempts to awaken interest in foreign 
fields are not only painfully expensive but wastefully trouble- 
some in the conduct of business at home. 

What Deciding to Go in 
for Export Trade Means 

When the manufacturer decides to sell his goods abroad it is 
taken for granted that he has a sufficient amount of capital to 
lay aside for preliminary development, although it is not neces- 
sary to use a large fund for such purposes. As- the monetary 
requirements of each individual manufacturer depend on his own 
peculiar organization, and the scope of his activities in foreign 
fields, it is absolutely impossible to name an arbitrary figure as 
representing the initial capital outlay that would be required. 
The amount of capital for foreign trade development depends, 
just as it does at home, on the extent of the activities contem- 
plated, and the condition of the investor's surplus. No sane 
business man will recklessly devote a large amount of his acces- 
sible capital in testing new markets. A well defined idea of the 

6 



PROBLEMS CONFRONTING THE EXPORTER 7 

capabilities and requirements of those markets is the first essen- 
tial of the practical business man. Therefore, in deciding to go 
in for export trade the manufacturer — it is taken for granted — 
has made a preliminary survey of the entire situation. First of 
all he has carefully analyzed his own situation. He has learned 
that he can increase his factory output by efficient management 
without extravagantly increasing his overhead expenses. He has 
learned that his product can be sold in other countries where 
the degree of civilization is advanced. He has carefully looked 
over the field for competent men to take charge of his exporting, 
and is satisfied that he can find fairly competent employes to 
entrust with such a delicate undertaking as export trade. He 
has made a close study of laws, regulations, rates, customs 
requirements, consular documents and hundreds of other details 
peculiar to the exporting business. Deciding to do exporting 
means the mastering of all these details, along with many others 
which will be taken up in subsequent chapters. 

Study of Market Conditions 
an Essential Requirement 

Good business judgment should dictate a careful survey of 
market conditions in the countries where the manufacturer is 
contemplating the development of a demand for his articles. The 
success of an article at home should not serve as a barometer that 
will determine its salability overseas. The American people spend 
millions in chewing gum every year, yet this is not an indication 
that the article would "go big" in foreign countries. The chewing 
gum habit has not at this writing been acquired universally. 
Breakfast foods, while enjoying a big sale in the United States 
and in Europe, are not very popular in Latin America, where 
the people by habit confine themselves to coffee and rolls as the 
first meal of the day. Again, climate may have a direct bearing 
on the success of a manufacturer's article abroad. The merchant 
who endeavors to market electric fans in Punta Arenas, Chile, 
or woolen underwear in the Panama Republic is doomed to lose 
some money. He should not fail to study the climatic condi- 
tions in foreign countries. With little effort he could have 
learned that the citizens of Punta Arenas are already blessed 
with a cool breeze that is practically perpetual, thereby dispens- 
ing with the necessity of artificial "air," while the people of 
Panama find plenty of comfort in a certain style of underwear 



8 EXPORTING TO THE WORLD 

whose material and weight are in keeping with the climatic con- 
ditions peculiar to that country. Ignorance of weather conditions 
in Rio de Janeiro caused a merchant the loss of considerable 
money a few years ago. He had endeavored to unload a con- 
signment of snow plows on an innocent public. The study of an 
atlas for a few moments would have saved this merchant con- 
siderable trouble. 

Some Factors Governing 
Export Trade 

Needless to say, the manufacturer must know what changes 
must be made in his article in order to meet the requirements of 
his foreign customer. In order to do this he must know more 
than climatic conditions or habits of the people. He must become 
familiar with special requirements and peculiarities of the particu- 
lar markets he wishes to exploit. Failure to take this precaution 
will find him attempting to dispose of articles, the manufacture 
of which did not take into consideration certain factors govern- 
ing their sale. For instance, in many countries of the world the 
metric system of weights and measures is prescribed by law. 
The American manufacturer who ships a consignment of instru- 
ments to a country where distance is read in terms of meters 
and kilometers, and weights in terms of grams and kilograms, 
without changing the reading thereon so as to harmonize with 
the prevailing system, would be committing a grievous blunder. 
Neither should he attempt to ship typewriters to countries where 
the prevailing language is Spanish without first equipping them 
with characters peculiar to that tongue. This, of course, involves 
the problem of changing the manufacture of these articles in a 
slight degree to meet foreign requirements. It is an experience 
that has been successfully met by American manufacturers who 
have altered their domestic plans to comply with the requirements 
of the foreign markets. It is one of the essential factors that 
must be considered in venturing into foreign trade. Probably 
too much unjustifiable criticism has been directed at American 
manufacturers who have refused to make a change in the manu- 
facture of their product in order to comply with certain require- 
ments in foreign markets. There are certain automobile manu- 
facturers in this country who refuse to change the position of 
the drive from the left to the right in order to comply with the 
requirements of some Latin- American countries where the chauf- 



PROBLEMS CONFRONTING THE EXPORTER 9 

feur turns to the lett instead of to the right. This may possibly 
be due to stubbornness or, perhaps, to the impossibility of mak- 
ing the change without incurring considerable loss. It is possible, 
also, that the buyers of automobiles asking for these changes 
are unwilling to pay the extra costs that may be involved. It 
must be remembered that the basis of our industrial wealth rests 
on our policy of quantity production. While it is possible to turn 
out a tremendous amount of work from a factory that is geared 
up to produce in enormous quantities at a very low cost, yet a 
slight deviation from the methods of that production is likely 
to increase the price beyond all proportion. Hundreds of manu- 
facturers in this country have turned down big orders from for- 
eign buyers simply because they were unable to make the neces- 
sary changes in a product and at the same time secure themselves 
against loss. It is doubtful, however, if any manufacturer would 
turn down an order regardless of the minor changes required if 
he were assured of reasonable profits. 

There is not an article produced by an American manufacturer 
that may not be sold in foreign countries. It is not so much the 
problem of finding something that will sell overseas as much as 
ascertaining under what conditions an article may be sold and 
where it may be sold to the best advantage. Take the maker of 
straw hats, for instance. Straw hats have a wide foreign market, 
but it is absolutely essential for the manufacturer to study cli- 
matic conditions in the various countries before he can intelli- 
gently dispose of his goods. By taking advantage of the dif- 
ferent seasons he will find a sale for his hats for practically the 
entire year. In countries south of the equator winter is on its 
way when the people of the United States are basking in the sun- 
shine of an early spring. When the straw hat selling season is 
over in this country it is about to start in Argentine, Chile and 
Uruguay. The automobile trade and clothing business enjoy a 
similar advantage. 

Manufacturer's Aim Should 
Be to Please the Customer 

We sell in order to make a profit. The customer is interested 
in an article which he has accepted because it has an element of 
utility to him. It has a degree of quality that is satisfactory, and 
the price is reasonable. Generally speaking, it makes no differ- 
ence to the purchaser where the article comes from as long as 



10 EXPORTING TO THE WORLD 

it meets his requirements. The manufacturer cannot impose an 
article upon an .unwilling customer and expect to build up his 
trade on that basis. We must remember that the development of 
a successful export business does not depend so much upon our 
facilities to supply the world with our commodities as it does upon 
our ability and willingness to please our customers. This, as 
has been explained already in this chapter, may involve a readjust- 
ment of factory processes, and this question will require disposal 
by the proper executive only. But a definite policy must be 
established at the outset. "Shall I change my methods to meet 
foreign requirements or shall I endeavor to sell what I have 
already manufactured?'' This is the question that the manufac- 
turer must settle definitely. Under date of December 7, 1915, 
at the convention of the National Association of Manufacturers 
in New York City, Dr. E. E. Pratt, former chief of the Bureau 
of Foreign and Domestic Commerce, made this statement: "I 
wonder if most of the manufacturers who intend to embark in 
an export trade realize that a definite policy must be adopted at 
home as well as in the foreign field. As a matter of fact, some 
of the most important decisions which the manufacturer can 
make with reference to foreign trade are to be made at home 
with reference to his home organization, with reference to his 
methods in the United States, with reference to production in his 
plant, and with reference to matters which are seemingly not 
directly in the foreign department. 

Factors Determining 
Success of Manufacturers 

"Are you, as a manufacturer, going to manufacture for export, 
or are you going to export what you have manufactured? The 
difference between these apparent similar statements is the dif- 
ference between success and failure. I have already referred to 
the plow manufacturer, 1 and I would like to carry that illus- 
tration a little farther. I know of one plow manufacturer who 

1. "Plows vary not so much with the taste of the pflowman as with the char- 
acter of the soil in which the plow will be used and the species of animal that will 
draw the plow. Plows of differeent types are used in the different sections of the 
United States. Similarly, plows of different types are used in different countries. 
The manufacturer, therefore, must find out the soil conditions and must export to 
a certain market the type of plow which the soil conditions there require." — Dr. 
E. E. Pratt, former chief of the Bureau of Foreign and Domestic Commerce, in 
a statement before the International Trade Conference in New York City in 1915. 



PROBLEMS CONFRONTING THE EXPORTER 11 

sent a man to Argentina. It was his business to get the facts 
about conditions there. He actually worked in the fields. He 
found out exactly the kind of plow that was suited to that par- 
ticular trade and to those peculiar soil conditions. He sent a 
cablegram, at a cost of many hundred dollars, instructing the 
manufacturer in detail as to changes which must be made in 
order to meet the conditions in Argentina. The factory superin- 
tendent objected. 'We can't make those changes,' he said to the 
manufacturer; 'it would involve the changing of all our manu- 
facturing methods/ But the manufacturer knew his business 
and he knew his man, and so he said to the superintendent: T 
have confidence in the man I sent to Argentina, and the plows 
for that market are to be made in the way which he desires. 
You follow his instructions.' The result was that a large, profit- 
able business was built up in Argentina. That is what I mean 
when I refer to a home export policy, and this illustration also 
shows the need of executive direction." 

Altering of Product 
May Be Required 

It is of prime importance, the foregoing experience shows, 
that the manufacturer should realize from the start that export 
trade may involve radical changes in the making of his product, 
and that he must either be prepared to make them and cater to 
the markets he desires to exploit or refuse to alter his domestic 
policy and therefore keep away from foreign trade. This prob- 
lem has been overcome by large plants whose quantity produc- 
tion has enabled them to sell to the world at a very low price. 
Henry Ford's automobiles are known in practically every section 
of the globe where automobiles are in use. However, Ford has 
had to alter the drive of his automobile from the left to the right 
in order to meet the requirements in certain Latin-American 
countries. In Chile, for instance, the driver must turn to the 
left. Therefore, he must have his drive on the nght. 

A striking illustration of a manufacturer's desire to please is 
related in "Export Trade," a New York export journal. It tells 
the story of a German salesman who was able to discover a weak- 
ness in a customer for a pocket knife with an illustrated handle. 
The story was told by an American salesman. It says : "On one 
occasion while traveling through Mexico I purchased a pocket 
knife which had attracted my attention because of the pretty 



12 EXPORTING TO THE WORLD 

medallion in the handle, displaying the face of a dark-eyedi 
senorita. I thought I had captured a sample of Mexican cutlery, 
but my delight did not last long. A few days later I happened 
to meet a German drummer, and on showing him the knife as 
a specimen of Mexican skill he laughed heartily. 'Why, I sold 
those knives myself/ he said. 'They were made in Germany.' " 

What has been said does not necessarily mean that the manu- 
facturer must keep on continually changing or altering his article 
to meet foreign requirements. Such practice, it will be found, 
is rather an exception, and not the usual rule. However, the 
average American manufacturer will listen to reason, and once 
convinced that he can profitably change his product in order to 
cater to the specific requirements of a certain market he will be 
the last person to turn down the proposal. 

The habits of hundreds of years may not be changed over- 
night by an enterprising American traveling salesman, or anyone 
else for that matter. It has been tried without much success. 
But when the people of a foreign country have been accus- 
tomed to an article of an inferior type it should be within the 
bounds of discretion to endeavor to introduce one of superiority 
and not a poor imitation that merely conforms to the customs 
of the people. For instance, the author has seen some ponderous 
keys in South America, so large that they require a joint in the 
center to permit doubling up in the pocket. They were made in 
England. The practical American lock and key are far superior 
to the British make, and the wise manufacturer will not only 
refuse to follow the British style but will insist on showing the 
purchaser the advantages of his own manufactured ware. 

Quality Not Prices 
Determines Success 

Nothing does more to harm our nation's good name than the 
disposing of worthless articles bearing the American trademark 
in foreign countries. A cheap article made in America reflects 
not so much upon the maker of that article as upon the country 
as a whole. During the war complaints from new customers 
in foreign countries against the poor quality of merchandise 
that American exporters had shipped to them were quite numer- 
ous. This is true particularly of South America, which was the 
objective of inexperienced salesmen in foreign countries during 
the war. These men, believing that the South Americans would 



PROBLEMS CONFRONTING THE EXPORTER 13 

"fall for" lines that had had considerable difficulty in the United 
States, carried along with them trunk loads of samples, hoping 
to reap a rich harvest, but to their amazement they discovered 
that their intended Latin- American victims were just as exacting 
in their selection of merchandise as some of the shrewdest 
American buyers. 

Witness the reputation of a certain nation in the Far East. 
This country has become extremely diligent in exploiting new 
markets. With its cheap labor and the use of cheap materials 
it has been able to produce low priced goods and for a time suc- 
ceeded in disposing of tremendous quantities of goods to un- 
suspecting customers. It is yet a dangerous contender in the 
world markets, but its cheap priced articles failing to bear up, an 
unenviable reputation has been the result among some of its 
former buyers. The matter has become so serious that legisla- 
tion is contemplated to prevent the exportation of articles from 
that country which fail to pass the test of quality before a board 
of competent commercial authorities. 

The foreign buyer seeks quality in an article as a general rule. 
The price is a secondary consideration. American-made goods 
are noted the world over for the skill that has been devoted to 
their making. Of course, there are articles such as raw 
materials whose sale depends on the price at which they 
are offered in competitive markets. In this classification 
such staple products as wheat, coal, corn and cotton are 
included. But the great percentage of articles manufactured; 
in this country are not subject to competition on a price 
basis. To further illustrate the point, we have in this 
country several different makes of automobiles, and watches, 
and fountain pens and typewriters. Some of these articles do 
not depend on the reasonableness of the price for their popular- 
ity. The arrival of a popular priced car in the market did not 
cause the factories producing the more expensive cars to close 
down. There is a typewriter so cheap in price as to be tempting 
to anyone having a use for such an article, yet it has not forced 
its more expensive competitors from the market. The Japanese 
government flooded certain markets with an imitation of a well 
known American fountain pen. The price was much lower than 
the American make, but the latter kept on selling. It was qual- 
ity that brought results. 



14 EXPORTING TO THE WORLD 

Americanr-made Goods 
Compete in Europe 

Before the war our manufacturers invaded some of the most 
highly developed countries in Europe from the point of industry. 
Germany had been a great competitor of the American producer 
of typewriters, farm implements, electrical machinery, automo- 
biles, sewing machines and wearing apparel, yet our merchants 
sent their wares to the heart of Germany and successfully com- 
peted against articles of Teutonic origin, and this in spite of the 
fact that increased overhead resulting from ocean freights and 
customs duties had to be met. Also, our furniture and shoes 
are being sold successfully in Chile, where local products of a 
similar character have won favor. The American shoe manu- 
facturers' development of the market in Chile and other South 
American countries was made rather difficult by the necessity 
of changing the style of the product. The people in those coun- 
tries have been accustomed to a short vamp with the round tip, 
a style brought over from France. The American makers of 
shoes now provide those countries with either round tips, or 
pointed tips, which is peculiarly an American fashion. 

The abundance of California's grapes does not prevent Spain 
from shipping this delicious fruit to this country. After all, 
there is a certain attraction for "imported" goods whose char- 
acteristics of having been made abroad assure it a ready sale 
among a certain element of the native population regardless of 
the merits or price of a locally made product. 

"Made in America" is a label that has won prestige in foreign 
countries. Foreign buyers — and they are most exacting — have 
learned to place implicit confidence in commodities bearing the 
American trademark. They know that we do not produce 
trash here. We have made it possible to put quality into our 
products through our highly developed industrial system. We 
have been able to effect quantity production without impairing 
quality. We have mobilized an army of the most competent work- 
men in the world, to whom we have paid the highest wages of 
any workmen in any country. Their standard of living has 
been high and yet we have been able to compete in foreign 
markets with countries that have had the apparent advantage 
of lower labor costs. What is the answer? It is the quality of 
our material that has won us markets. We should have no 
faith with those who insist that the reduction of wages is essen- 



PROBLEMS CONFRONTING THE EXPORTER 15 

tial to successful competition against the cheap labor of other 
countries. The contrary has practically been proved. 

Other Factors that 
Govern Export Trade 

A superficial study of conditions in any given market is not 
enough. The manufacturer who is preparing to extend his 
business overseas should know as much about the territory he 
aims to cover as far as essential information is concerned as he 
does about the various markets at home. He should not only 
study the history of the country — which serves as a basis for 
intelligent observation — but also the degree of civilization to 
which the inhabitants of the country are accustomed. A manu- 
facturer of pianos may not find a very extensive market for his 
wares in Haiti, but a careful study of the civilization of Aus- 
tralia will assure him of success in that line in certain sections 
of that country. 2 Needless to say, the difference in the degree 
of civilization between one country and another is the difference 
between success and failure in the sale of luxuries to which the 
people of highly civilized- countries have been accustomed. 

The prosperity of a country depends upon the stability of the 
government as well as upon its natural wealth. No matter how 
rich in minerals or agriculture a country may be, it can never 
enjoy the fruits of its wealth while those in power govern un- 
wisely and inefficiently. The government must be stable. Wit- 
ness the case of Russia representing an inefficient and unwise 
government, and Mexico impoverished by almost perpetual revo- 
lution. The study of political conditions should be just as im- 
portant to the manufacturer as the study of commercial and 
industrial conditions. 

In normal times steamers follow their schedules almost as 
precisely as railroad trains of highly developed transportation 
systems. The world's greatest ports are well equipped with 
modern facilities for the quick loading and unloading of cargoes. 

2. "There is probably no country in the world where pianos are more used, 
in proportion to population, and are considered more necessary as features of home 
life than in Australia. The local piano trade seems to follow closely the local mar- 
riage statistics, a piano being considered almost tlhe first essential of domestic life, 
so that it becomes the usual circumstance for a newly married couple to buy a 
piano, the easy time payments preventing any financial hardship in so doing. No 
matter how humble the home, nor how remote it may be from large cities, a piano 
is usually a leading feature of it." — Daily Consular and Trade Reports, February 
8, 1911. 



16 EXPORTING TO THE WORLD 

These ports are reached by the leading ocean highways and 
commerce is conducted with very little delay. Such ideal con- 
ditions do not prevail all over the world, however, and the 
manufacturer must take into consideration the location of ports 
that he wishes to ship goods to with respect to their proximity 
to the principal ocean trade routes. 

Kind of Population 
Determining Factor 

The manufacturer should not be misled into the belief that 
the success of his foreign trade depends on population figures — 
that greater the population, greater the volume of his business. 
The level-headed business man wants to know more than the 
total population of a given country or continent. The fact that 
China has a population of over 336,000,000 means nothing to 
him unless these figures are accompanied by data giving an idea 
of the class of people that make up this population. Neither 
will the statement that British India has a population of over 
300,000,000 people give the manufacturer an idea of the pur- 
chasing power of the inhabitants. According to the Statesman's 
Yearbook for 1912 the population of Bolivia was 2,521,000, 
while its purchasing population was 214,000. The population 
of Cuba in the same year was 2,474,000, while its purchasing 
population was 1,026,000. This indicates that total population 
must not always be relied on as an essential factor that deter- 
mines the potential buying power of a market. 



Chapter III 

METHODS OF EXPORTING 

Selling methods involved in exporting direct — Using 
traveling men to develop trade developing trade by cor- 
RESPONDENCE — Advertising as a means of developing busi- 
ness — The export commission house as an exporter — The 

export merchant 

There are two essential methods of exporting. They are as 
follows : 

Direct exporting, or indirect exporting. 

The manufacturer must choose between these two methods 
before beginning business. Then, after settling this phase of 
the problem, he must again attack it from a new angle. If he 
decides to do exporting direct he must decide on a definite policy 
in connection with this plan. If he decides to do exporting by 
the indirect method, then his worries will be practically over. 
Ordinarily, the difference between direct exporting and indirect 
exporting is the difference between being an exporter or not 
being an exporter. 

Selling Methods Involved 
in Exporting Direct 

The manufacturer choosing to sell direct to foreign customers 
becomes a full-fledged exporter in the real sense of the word. 
He has decided to exploit his own markets, to choose his own 
methods of developing business, and to shoulder the entire respon- 
sibility. He has a hundred and one problems to solve, the most 
important one being the method of developing the foreign 
market. Each method may depend on the character of his 
products, the amount of capital he has at his disposal, or the 
specific market he desires to exploit. The essential methods of 
selling direct are as follows : 

Through traveling salesmen. 

Through correspondence. 

Through advertising. 

17 



18 EXPORTING TO THE WORLD 

Through foreign branches. 
Through foreign agencies. 

Using Traveling Men to 
Develop Export Trade 

The manufacturer who can afford to send a traveling salesman 
to lucrative markets after he has carefully investigated their pos- 
sibilities for development is certainly selecting the ideal way of 
obtaining business. The personal element is just as important 
a factor in the foreign field as it is at home. The traveling sales- 
man supplies that element. Experience will dictate to what 
countries the traveling salesman should be sent. It is possible that 
the salesman will be confined to a limited market where the 
results obtainable will justify the expenditure of money on per- 
sonal representation. No manufacturer or exporter has been 
known to send traveling salesmen to every portion of the globe. 
In the first place it is needless, and in the second place, it is too 
expensive. The most careful manufacturers and exporters first 
study their field, and then decide what markets shall be exploited 
by traveling salesmen and what markets shall be exploited by 
other methods. 

Developing Export Trade 
by Correspondence 

Export business can be developed through correspondence. 
This iSj indeed, an economical way of launching into foreign 
trade, but at the same time it requires a technique in the handling 
of foreign correspondence that very few American manufac- 
turers can boast of. It requires tact. It requires diplomacy in 
letter writing. It is much more difficult to write a letter to a 
person one does not know than to a personal friend. The manu- 
facturer must understand the preparation of correspondence 
material that will not only interest the foreign purchaser who 
may be thousands of miles away, but will draw an inquiry as well, 
and later, perhaps, turn that inquiry into an order. Considerable 
export business has been developed in this country by the corre- 
spondence method, but only through the intelligent and skillful 
way in which the successful manufacturer employed it. 

Advertising as a Means 
of Developing Business 

Advertising is an important element in the development of an 



METHODS OF EXPORTING 19 

export business in whatever direct method the manufacturer has 
decided to follow. If the manufacturer decides to send a sales- 
man to foreign countries he must do a certain amount of adver- 
tising. If he decides to obtain foreign customers through corre- 
spondence only, advertising must be employed. If he decides 
to develop his export trade by using foreign agents, he must 
consider advertising. If he feels that he can afford the estab- 
lishment of a foreign branch, he must do advertising to exploit 
the field. Advertising involves the study of foreign media, of 
local media that circulates in foreign countries, the psychology 
of the people in the country where he wishes to sell his mer- 
chandise, their habits, customs and the degree of their civilization. 
It also involves the study of American foreign trade journals that 
circulate in foreign countries. 

Foreign Branches as 
Means of Developing Trade 

Provided the volume of business warrants it, the establishment 
of a foreign branch is a splendid effort toward developing a 
foreign trade. Some of our successful export manufacturers 
are enjoying a lucrative business as the result of business fore- 
sight in the establishment of foreign branches. The foreign 
branch affords the manufacturer the advantage of keeping in 
close touch with the market. Warehouses may be conducted in 
connection with the foreign branch. In these warehouses may be 
kept large quantities of goods in order that prompt deliveries to 
customers may be effected. The branches may also include show 
and sample rooms where customers may visit them to inspect the 
merchandise they wish to have sent to their business houses. 
This relieves them of the necessity of making long journeys to 
the United States for this purpose. Again, the manufacturer 
with a foreign branch is independent of selling agents and mer- S 
chant houses alike. His credit problems are reduced to a mini- 
mum as he is on the ground to investigate the customer's capa- 
bilities of meeting his obligations. 

The Foreign Agent as 
Export Trade Developer 

Hundreds of commission agents living in overseas ports de- 
pend for their bread and butter on their sale of foreign-made 



20 EXPORTING TO THE WORLD 

articles to which they have been entrusted by manufacturers. 
American commission houses have for many years recognized the 
importance of these foreign agents in the handling of their busi- 
ness abroad. American manufacturers, quick to grasp the ad- 
vantages offered, are now making suitable connections with 
these representatives. Often these commission agents are mem- 
bers of old established institutions that not only command a large 
business in their own districts but the business of rich sections 
of the country by means of distributing centers as well. The 
manufacturer, however, must be careful of the foreign agency 
with whom he establishes connections. Sometimes these houses 
are not what their letterheads indicate. Their credit standing 
may be shaky. In this day of specialized effort, however, it is 
not difficult to obtain reliable credit information on merchants 
in foreign countries. The manufacturer must also know the 
lines his agent handles. If the market is highly developed the 
foreign agent may confine himself to allied lines, such as office 
equipment or typewriters, while in the lesser developed 
markets he may deal in articles ranging from needles to pianos. 
It is, therefore, essential that the manufacturer inform himself 
on the extent to which the market has been developed, as well 
as on the character of the goods his foreign agent has for sale. 
In making proper connections with a foreign agent the manu- 
facturer will enjoy the advantage of being represented in the 
local field by a well established organization whose standing in 
the community may be a distinct asset. The manufacturer must 
also take into consideration the element of personal influence on 
actual buyers, which, after all is said, is the most powerful force- 
to be considered in selling effort. There are also the advantages 
of carrying only one foreign account in the domestic books, of 
worrying over only one credit risk, and of the assurance, per- 
haps, of a certain volume of business. 

Selling Methods Involved 
in Indirect Exporting 

The direct method of exporting involves the establishment of 
an export department as well as the creation of some sort of 
selling policy. It involves the handling of all the details peculiar 
to the shipment of goods overseas as well as the assuming of 
the risks in connection with the granting of credit to foreign 
purchasers. Perhaps the manufacturer is not in a position to 



METHODS OF EXPORTING 21 

assume all these duties and yet desires to sell his merchandise 
in foreign countries. Perhaps he is not capable of financing his 
overseas sales. In such a case what can he do? He may turn 
over his business to a middle man. There are many kinds of 
middle men. The following constitute the essential agencies 
through which a manufacturer may do business in foreign 
countries : 

The export commission house. 

The export merchant. 

The manufacturer's export agent. 

The export forwarder. 

The Export Commission 
House as an Exporter 

The export commission house is a very old institution in for- 
eign commerce. In England the operator of an export commis- 
sion house is called an indent merchant. The indent represents 
the order the commission house receives from a foreign client. 
The export commission house may be found in all the principal 
American ports. The functions of an export commission house, 
theoretically, are not to sell American merchandise in foreign 
countries, but rather to act purely as a purchaser of American 
commodities for foreign buyers. The early history of these ex- 
port commission houses shows that it was not their practice to 
charge the manufacturer a commission for the work it was en- 
gaged in performing for the foreign buyer. In late years, how- 
ever, the commission houses have been known to be making 
charges to the manufacturers as well as obtaining a commission 
from their foreign clients. It is argued by the commission houses 
that the small commission charged to their foreign clientele — fixed 
by custom — is so small that it is impossible to obtain reasonable 
returns in this present day of the high cost of doing business. 
Neither is it the function of the export commission house to 
exploit the foreign field for the manufacturer. It represents the 
buyer, not the seller. It will buy goods only on the best terms 
obtainable, and only when it has actual orders from the foreign 
buyer to execute. On the other hand, the manufacturer is en- 
tirely relieved from such details as the shipment of goods and 
the collection of his money. The commission house finances its 
own shipments. Ordinarily, the manufacturer is paid for his 



X 



%% EXPORTING TO THE WORLD 

merchandise on the usual domestic trade terms. Within recent 
years, however, the export commission house has been extending 
its activities to such an extent that its original function has been 
practically lost sight of. 

The Export Merchant as 
Seller of American Wares 

Another intermediary is the export merchant. His functions of 
late have become so closely intermingled with those of the export 
commission house that it is difficult to make a distinction. The 
export merchant m theory does not buy or sell on commission. 
He purchases outright and sells outright for profit or loss. He 
has established branches in certain markets. Sometimes he 
operates retail stores in connection with these branches. The 
manufacturer, as in the case of the export commission house, 
originally could expect any special selling effort or service from 
the export merchant. 

The Manufacturer's Export 
Agent as an Intermediary 

As a comparatively recent product in the United States the 
manufacturer's export agent may appeal to the manufacturer. 
It is the manufacturer's export agent's duty to exploit the for- 
eign market for his client's goods. That is his business. He 
also relieves the manufacturer of all details pertaining to ship- 
ping for export or financing the shipment of goods abroad. As 
the functions of these manufacturer's export agents differ it is 
necessary that the manufacturer make a close study of the advan- 
tages offered by the various representatives before making a 
permanent connection. Some of them charge commissions for 
their work, while others demand regular monthly payments. Still 
others have a fixed salary and an expense account which is pro- 
vided for by the various' manufacturers interested on a pro rata 
basis. Some confine themselves to allied lines, while others en- 
gage in obtaining representation for any line that is of merit, 
regardless of its character. 

The Export Forwarder 
as a Middle Man- 

The export freight forwarder is not a selling agent. His 



METHODS OF EXPORTING 23 

functions are to ship goods to their destination, thereby relieving 
the client of all the details peculiar to such activity. He ships 
goods to any part of the world in any quantity. He attends to 
all shipping documents, places the goods on board the steamer, 
and delivers to the foreign purchaser. Sometimes he executes 
orders in foreign countries, but this is not a part of his regular 
functions. 

Other Indirect Selling 
Methods Open to Exporter 

The allied company and the selling company serve as types of 
other organizations that the manufacturer may find profitable to 
join. The allied company takes over the firm's name for a def- 
inite territory. It may involve patent rights in foreign countries. 
The allied company may be under the management of men finan- 
cially interested in the export manufacturer's business or under 
the management of outsiders. The allied company's methods 
may involve financial responsibility to a certain extent in the in- 
dustries of those manufacturers whose products are represented. 
The allied company may even manufacture abroad. 

The selling company differs from the allied company in that 
it confines its activities purely to selling. The chief service that 
the selling company renders is the more rapid development of 
foreign markets. 

As the export trade of the United States is rapidly growing, 
hundreds of new organizations are being formed to participate 
in this wave of prosperity. As these new companies spring up 
they offer the manufacturer new inducements of one kind or 
another. Some are good and some are bad. The manufacturer 
is cautioned to watch his step in conferring with these budding 
organizations before making any permanent agreement to enter 
foreign trade. 



Chapter IV 

ORGANIZATION OF EXPORT DEPARTMENT 

Export department need not be an expensive affair — 
Selecting an export manager for the business — Someone 
jn authority as executive head where is export depart- 
ment to be established? essential units in export 

Department 

When the manufacturer resolves to enter export trade it is 
taken for granted that he is prepared to assume all the burdens 
peculiar to shipping and selling to foreign customers. The mat- 
ter of establishing an export department rests now on his own 
shoulders.; He must exploit his own market, maintain his own 
sales force, conduct his own advertising propaganda, make his 
own market surveys, investigate the credit standing of his pros- 
pective customers, make his own collections, and assume a mul- 
titude of other small burdens in connection with the export busi- 
ness. However, as a direct exporter he has the advantage of 
handling his own goods, and of cutting out the middle man's 
profit. He comes in contact with the market personally. He 
builds up his own business. The middle man does not do this 
for him, as a rule. As a direct exporter he has that personal 
interest and enthusiasm in the success of his pet products that 
no commission man or export manager may have. This is the 
element that is inspiring many manufacturers to organize their 
own export departments and sell direct to foreign customers. 

Export Department Need 
Not Be Expensive Affair 

The organization of an export department need not involve 
the expenditure of a considerable sum of money in the beginning, 
unless, of course, a manufacturer's business is so extensive that 
additional capital is accessible for the establishment of a thor- 
oughly equipped division whose chief functions shall consist of 

24 



ORGANIZATION OF EXPORT DEPARTMENT 25 

the management of the foreign business of the company in all 
of its details. But for the small manufacturer — the man of 
moderate means — who desires to adopt a sound pay-as-you-go 
policy of developing the foreign markets, the logical course to 
follow would be to absorb the additional duties required in 
exporting in his existing organization, with an export manager 
in charge who shall devote his entire time to the details. Even 
then there should be close supervision by someone interested in 
the business or by some trustworthy employe so that all prob- 
lems arising from time to time may be settled with some degree 
of intelligence. Export trade is, indeed, interesting. The person 
in charge deals with all manner of people, who follow different 
methods of living, and of thinking and of speech. Today he may 
be communicating with a customer in Egypt and tomorrow with 
a customer in Siberia. His desk is the hub of a wheel whose 
spokes reach out in all directions. The export head of the busi- 
ness is truly a man of the world. He becomes broadened and 
he can look at things from the other fellow's viewpoint. The 
establishment of an export department need not involve extra 
buildings, or special departments. It can fit right into the routine 
of the domestic business — and succeed. 

Selecting an Export 
Manager for the Business 

Although the field is quite full of applicants for the position 
of export manager, the manufacturer will find not a little diffi- 
culty in obtaining a competent person to fill the bill. In New 
York City alone there are hundreds of young men whose only 
claim to consideration rests in their ability to speak and write 
in a foreign language. This is not enough. A successful export 
manager should be more than a linguist. He should be a student 
of countries, market conditions, political developments in foreign 
countries, and, above all, a commercial diplomat. Moreover, he 
should be a gentleman in every respect, as he will come in con- 
tact with buyers from foreign lands whose degree of culture and 
learning may be surprising to the provincial American business 
man. As an export manager is expected to transact a large 
volume of business through correspondence with customers he 
does not know it is of prime importance that he be particularly 



26 EXPORTING TO THE WORLD 

skillful in dictating letters and in avoiding certain expressions 
in his correspondence so common to the American business 
man of average intelligence. For the young man who is seeking 
a career which may grow with America's export trade here is 
an opportunity that should exercise his initiative and enterprise 
to the fullest extent, and consequently bring adequate financial 
returns. 

Who Is Capable of Filling 
Export Manager s Shoes? 

Perhaps the manufacturer's first thought in looking around for 
an export manager will be to advertise in the newspapers. His 
morning mail will probably consist of applications from export 
managers already connected with other fifrms, or from persons 
claiming to know foreign countries and one or two foreign lan- 
guages. Perhaps the mail may bring in the applications of young 
men who have just completed a course in Foreign Trade in some 
school or college. The colleges and universities of the country are 
now paying particular attention to the teaching of subjects aimed 
to fit young men for foreign trade service. These institutions are 
doing a worthy work and place at the disposal of the student 
valuable information that is essential in foreign trade. A domestic 
sales manager, also, may present his application along with a 
record of his sales efforts at home. His own sales manager may 
be a contender for the position. 

Of all these candidates the most promising is the export man- 
ager from another firm. The manufacturer who is able to obtain 
the services of an export -manager who is thoroughly experienced 
in the business is, indeed, fortunate, as their number is limited. 
The export manager not only introduces an export system into 
the manufacturer's organization, who may bring along with him 
an invaluable experience which years of hard labor has accu- 
mulated. 

The sales manager is a likely candidate. The man who is 
able to sell goods in the domestic field, and who has had experi- 
ence in directing salesmen and selling campaigns should make 
an efficient export manager. Possessing this knowledge of do- 
ing business at home, it is only a question of time when he can 
master the "slant" of export trade. If the manufacturer can 
afford to take his own sales manager from his domestic berth 
by all means he should give him the opportunity of conducting 



ORGANIZATION OF EXPORT DEPARTMENT 27 

his export department. By following this course he need not 
go out of his own organization in search of an export manager. 
Instead, he will be throwing the responsibilities on the shoulders 
of one who is already acquainted with his products and organiza- 
tion. 

There may be in the organization a young man who displays 
considerable ability for organization and the handling of details, 
and who has indicated a willingness to grasp the principles and 
technique of export trade. Under careful direction and training 
a young man possessing these qualifications should soon be able 
to take complete control of the export business of the concern. 

Someone in Authority 
as Executive Head 

No matter who the manufacturer selects to> conduct his export 
department there should always be someone in authority — some- 
one financially interested in the concern — who should serve in 
the capacity of court of last resort in matters demanding execu- 
tive decision. From time to time the export manager will submit 
propositions and suggestions concerning the development of the 
business overseas. The export manager should not decide these 
things alone. He should merely submit his recommendations. The 
executive in charge should also be responsible for the amount of 
experimentation in a foreign market. He should determine whether 
a change in the product is justified by the returns promised. He 
should serve as the final judge in matters involving credit prob- 
lems. The determining of a market policy which involves the 
use of salesmen exclusively or correspondence and advertising 
exclusively, the establishment of branches or the appointment of 
foreign agents are other matters that demand executive atten- 
tion should rest with the executive in charge. Is the manufac- 
turer going to sell direct to wholesalers or to retailers or to con-, 
sumers? This is a question that the executive must answer. 

Where Is Export Department 
to Be Established? 

Let us suppose the manufacturer has selected his export man- 
ager. The next question is, "Where shall I establish my export 
department?" He must decide between the factory and the prin- 
cipal port. If he establishes his export department at the factory 



28 EXPORTING TO THE WORLD 

he will be giving his export manager the advantage of close 
contact with the business, and an opportunity of not only direct- 
ing the invoicing of the goods and their proper packing, but of 
offering practical suggestions in the method of production that 
the peculiarities of the different markets demand. When certain 
difficulties relative to shipping instructions arise the export man- 
ager is on the ground to clear them away. 

On the other hand^ if the manufacturer wishes to establish a 
separate export department at the principal port he will be giving 
his export manager the advantage of being in close touch with 
the buyers who are constantly visiting this country, and with 
shipping conditions, so that he may be able to direct his own 
shipments without employing a foreign freight forwarder or 
some other intermediary. Established at the principal port, the 
export manager also has the advantage of keeping his ringers on 
the pulse of export trade. He meets with other members of his 
fraternity of business with whom he may be able to exchange 
views. The buyers of hundreds of commission houses are sta- 
tioned at the principal port. It is to the advantage of the export 
manager to keep in close touch with these representatives. It 
is possible, also, that he may be able to finance drafts on foreign 
buyers much more economically than it is possible at some inte- 
rior point where the facilities of financing foreign trade ship- 
ments are inadequate. 

Export Department Should 
Be Well Equipped 

Wherever the export department is established it should be 
the aim of the manufacturer to equip it with a library that 
3hould contain all available literature on the subject of exporting, 
together with accurate atlases and official data. This will add 
to the efficiency of the export manager. The manufacturer 
should subscribe to all the leading export magazines, as well 
as to the publications of the United States Bureau of Foreign 
and Domestic Commerce which deal exclusively in foreign trade 
matters. The reports of the conventions of the National Foreign 
•Trade Council and of the American Manufacturers' Export 
Association are also valuable. The Philadelphia Commercial 
Museum is splendidly equipped to offer valuable information on 
all matters pertaining to export trade, as are also a large number 



ORGANIZATION OF EXPORT DEPARTMENT 29 

of Chambers of Commerce in other cities. The Pan-American 
Union is not used enough by American manufacturers seeking 
information in connection with trade problems with Latin-Amer- 
ica. The Pan-American Union, located in Washington, D. C, 
is supported by twenty-one republics of the western hemisphere, 
and its functions are to bring about closer political and commer- 
cial relations between the countries involved in the organization. 

Essential Units in 
Export Department 

We know now that there must be an executive in charge of 
the export department aside from the export manager. We 
know that the export manager is in charge of the details peculiar 
to exporting and is responsible for his acts to the executive, who 
may be the manufacturer himself or someone financially inter- 
ested in the concern. But the export manager must have assist- 
ants. If the business does not justify a distinct personnel from 
that already employed in the domestic field then it is simply a 
matter of adjusting the new duties to the employes who conduct 
the domestic business. 

However, if the manufacturer is determined to equip his export 
department with an entirely new force he will learn he has quite 
a job on his hands. In the language of Mr. D. E. Delgado, 
export manager of the Eastman Kodak Company, who gave 
an address on "Export Technique" before the Sixth National 
Foreign Trade Convention in Chicago, "the greatest trouble 
manufacturers have in developing foreign trade is lack of com- 
petent and plentiful help with export knowledge of languages 
and details, and time and again business has been lost because 
of continued petty annoyances caused by inexperience or badly 
informed correspondents." 

Mr. Delgado continues : "After long experience in the ex- 
port business with an organization which is supplied with 
means sufficient to obtain that which is most desirable, it is 
my opinion that a party going into the export trade should 
begin by selecting a man to look after the development of 
business ; one who has traveled, is thoroughly posted on export 
dealings and, if possible, one who has a knowledge of foreign 
languages. He should receive all incoming mail and read all 
outgoing mail signed by the correspondents and, in turn, he 
should divide the detail work and correspondence by terri- 



30 EXPORTING TO THE WORLD 

tories between the other men who would be made responsible 
to him for the success of the sales and connections in their 
territories. The export manager must arrange the detail work 
in such manner that he may be able to make various trips, 
say, one every year, until he has visited all the countries with 
which he is doing business, and do the missionary work 
necessary in new territories so he may know where to send 
his salesmen and what to expect from them under the condi- 
tions. It frequently happens that a class of merchandise will 
find ready sale with comparatively easy work for a salesman 
in one territory, while a man working a great deal harder may 
not obtain as many orders in a territory close by, and the ex- 
port manager should be sufficiently posted to properly judge 
the ability of his men, which he cannot do unless he visits the 
territory and becomes aware of conditions, such as competi- 
tion, purchasing power of the inhabitants, etc. These men 
should be sent out yearly to cover all or part of the territory 
and return to the office to handle correspondence, etc., and 
keep in touch with it. Of such men would be required, first, 
experience in the shipping business; second, knowledge of 
some of the languages of the territory which he is to direct; 
third, traveling experience; fourth, a man who can code a 
cable efficiently and economically and who will not hesitate to 
use cables when necessary; competent to correspond in the 
customers' languages, or at least capable of writing, in addition 
to English, French and Spanish; the advantage of the man 
who controls French and Spanish being that he could write 
French and English to the Mediterranean and European coun- 
tries and French and Spanish to Asiatic and Latin-American 
countries. Further, such man should, as soon as he is ac- 
quainted in a general way with the line of goods of the manu- 
facturer, be sent to sell goods in the territory, for the purpose, 
not merely to sell merchandise, but to get acquainted with the 
customers and conditions in the various countries with which 
he will do business. When this man returns to the office, he 
will be able to produce far better results, far in excess of what 
could be accomplished by many years of continued corre- 
spondence without personal acquaintance, and will be fitted 
to maintain friendly business intercourse. The first two men- 
tioned conditions would be sufficient if the man is capable. 



ORGANIZATION OF EXPORT DEPARTMENT 31 

Export Manager Should 
Control Export Credits 

"The manager of the export department should also have 
control of export credits, or the credit manager should comply 
with the arrangements made by the export man, for the reason 
that it frequently occurs that perfectly responsible foreign 
firms ask for extension of time on drafts, not due to their in- 
ability to pay, but the exchange market may have changed 
violently for various reasons and by waiting a few days or 
weeks the drafts could be met with considerable saving to the 
foreign buyer. The export man, not being busy with the 
details, can keep in constant touch with the fluctuation of for- 
eign exchange, political and mercantile conditions of the ter- 
ritories, and can better judge the necessity for the request, 
much better than the domestic credit man, who, of necessity, 
is guided by set rules and justified by very different condi- 
tions. Liberalty in handling credits is one of the best means 
of creating better feeling for the firm and greater assurance 
of pleasant business relations, which, in the last analysis, is 
the best business developer. 

Duties of Correspondent 
Salesman 

"We will dissect one correspondent salesman's territory. 
This man, first, should correspond in the languages of his 
territory and the export manager should hand him the corre- 
spondence of that territory. He, in turn, after looking over 
the orders, will see the credit man to find out, first, whether 
the party has any credit on the books ; second, whether he has 
a letter of credit; third, whether there is a record that all of 
the drafts which have been drawn against him have been 
accepted, unless the credit has been issued without "recourse" ; 
make sure that if the date of maturity has arrived the drafts 
have been paid, and if this information is not available, calcu- 
late the time for same, and if such time has expired ; hold the 
order for further information, which may be obtained by com- 
municating with the bank through which the drafts were 
sent, or by telegraphing direct to the connecting bank at the 
point where the customer is located. He will then, if every- 
thing is in order, pass the order to the order clerk who orders 



32 EXPORTING TO THE WORLD 

the goods from the factory (an entirely different process from 
the export commission merchant, who would in such case 
hand the order to the purchasing agent to buy the goods). 
When this letter reaches the order department, sufficient 
copies of the shipping department ticket should be made so 
that the copy may go to each of the various plants or factories 
where the goods called for on the order may be prepared ; the 
object being that each plant sends the part of the goods which 
they are able to supply out of the order. Each ticket should 
have the same order number, and when they reach the stock 
room they would be specifically marked for that one order 
and in this way get the goods together much sooner than if 
the stock room clerk had to combine different order numbers. 

Correspondent Should 
Follow Up His Orders 

"Having passed the order department and reached the ship- 
ping department, the correspondent above referred to should 
see to it by regular visits to the shipping room that his orders 
move regularly to prevent packers from dispatching the 
smaller and easier orders in preference to heavy and more 
complicated orders ; to see that stencils, binding and weights, 
gross, net and legal, conform to the requirements of the tariff 
of the country of destination, and also to be able to get an idea 
as to the size and weight of the shipments in order to write to 
his freight broker to engage space and secure shipping permit 
for the transportation of the merchandise to destination. 

How Order Proceeds 
Through Department 

"When the goods are dispatched and billed, the invoices, 
which should be made in Spanish for Latin-American coun- 
tries and show the net, legal and gross weights, as well as 
the measurement of each case, and, in addition, the net weight 
of each class of item packed in such case, should then be 
handed from the billing department to the credit department 
clerk in the export department, and the railroad freight or 
express receipt is also to be handed to the credit clerk, who 
will proceed, first, to insure in the open market or in the policy 
of the customer, or in shipper's own open policy, covering the 



ORGANIZATION OF EXPORT DEPARTMENT 33 

various risks for breakage, pilferage, and general damage, as 
required by the customer or as the class of goods necessitates, 
bearing in mind that insurance should cover, not only the 
amount of invoice, but local and ocean freights, as well as all 
shipping charges ; an addition of 10 per cent, generally would 
cover; then follow instructions and forward the necessary 
papers and invoices to the freight forwarder, accompanied by 
the declaration which the customer supplies for the purpose 
of consular invoice at the seaport and a certain number of 
copies to the customer abroad, keeping the required number 
to supply the bank when drawing for the value. This clerk 
should be the custodian of the letters of credit, as he will in 
some cases have to attach these to the invoices and drafts to 
be sent to the bank at the seaport to negotiate when the freight 
broker delivers the endorsed steamship bill of lading to the 
bank. This is a matter which the manufacturers in the interior 
points of the United States have to be very particular about 
as the consulates of the various foreign countries require that 
the man who signs the consular invoices be duly authorized 
by the manufacturer, and the freight broker, to whom such 
authority should be extended, requires that he should be given 
the exact phraseology that the customer requires used in the 
consular invoice for his goods. The clerk doing this work 
must be trained to use great care as this matter demands very 
careful attention because in most foreign countries, particu- 
larly the Latin-American countries, a customer in any one 
town is apt to wish his goods classified under a certain para- 
graph of the tariff and a customer in another town may re- 
quire the same goods classified under a separate paragraph of 
the same tariff, and any deviation would be apt to cause heavy 
fines at the Customs and the manufacturer would face a heavy 
payment in addition to disturbing pleasant relations, and inas- 
much as the manufacturer in this country has no safe guide 
as to the interpretation of the tariff of each foreign country, 
he must of necessity comply with the wishes of his customers 
or else not accept the business. 

"The order clerk must have a good schooling and at least a 
course in a business college ; be familiar with the metric sys- 
tem so that carelessly written orders, as are not infrequently 
received, will be interpreted correctly; a man with good judg- 
ment to interpret an order and who would know when not to 
make any substitution ; who should be able to decode a cable 



34 EXPORTING TO THE WORLD 

message, and who should be somewhat familiar with foreign 
languages in order to save the necessity of having each and 
every order translated before handing it to the order clerk. 

Duties of the 
Packing Department 

"The packing department should be provided with scales 
that show automatically both pounds and kilograms ; the ordi- 
nary scales showing pounds only, which require the packer to 
convert pounds into kilos, are the cause of very frequent mis- 
takes, which means excessive payment of duties, if over, and 
heavy fines, if under the true weights. The best man in the 
domestic packing room ,and by this I mean the most careful 
and not the man who turns out the most work, should be the 
one selected to do foreign packing, as very frequently each 
item, before being placed in the packing case, must be weighed 
for legal and net weights and he must make a careful record 
of the contents of each case, as when the invoice is made by 
individual cases, each numbered in rotation in series with 
previous shipments to a certain party, it saves the need of the 
cases being opened by the customs inspectors at the point of 
entry in the country of destination, for when the goods pass 
the customs they are frequently shipped to interior points by 
crude means and the well packed case which has not been dis- 
turbed will stand the extra travel and arrive in better condition 
with less chance of pilferage than if it had been repacked care- 
lessly by laborers at the custom warehouse. 

Manufacturer Should Be 
Member of Association 

"The firm doing export business should become a member 
of at least one of the associations which are in such a worthy 
manner assisting the manufacturers in this country to develop 
export business, for the reason that in an emergency when the 
export manager in a small town wishes to compare notes he 
can write to the association for information and also because 
of the fact that such associations generally have periodicals 
in which they publish inquiries from foreign buyers and keep 
the export manager in touch with the legislation, changes in 



ORGANIZATION OF EXPORT DEPARTMENT 35 

shipping and tariffs, political disturbances in foreign countries, 
etc., which will enable him to better handle his position. 

"We note that of late governmental departments are making 
efforts to teach foreign trade as well as foreign languages in 
urban universities as well as in business colleges and it is to 
be hoped that to enable our youth better to fit themselves to 
assist in the development of foreign trade, after they have 
graduated from high school, they should learn export tech- 
nique, as follows: 

To correspond in Spanish and French. 
To study the history of Latin and Oriental countries. 
To practice patience in dealing with people of other 
races or other tendencies, without presuming to teach 
them our ways. 

To be accurate and careful, considering that small mis- 
takes, which could be rectified at home by the following 
mail, would cause the expense of cabling or heavy fines 
abroad. 

To obtain a very good knowledge of world geography 
and habits of the people of other countries. 
To study the technique of marine insurance. 
To study the details of foreign exchange and foreign 
moneys. 
"With such experience we should in a few years create a 
body of capable export merchants, placing our nation on a par 
with European merchants who have been developing their 
youth in such manner for many years." 



Chapter V 

THE TRAVELING SALESMAN OVERSEAS 

Manufacturer judged by man in the field — Necessary 

qualifications of traveling salesman abroad preparations 

necessary for trip abroad expenses of traveling sales- 
MAN — Licenses required in foreign countries — The combi- 
nation TRAVELING SALESMAN 

The success or failure of a manufacturer in developing busi- 
ness in a given foreign market by means of a personal represen- 
tative on the field will depend just as much upon the qualifica- 
tions of the person he may send overseas as his minister 
plenipotentiary as on the quality or utility or price of his wares. 
Doubtless the manufacturer who decides on the policy of selling 
abroad by using commercial travelers has' on his mind the plan 
of developing a permanent business. It is the finesse, therefore, 
with which he makes his introduction that is going to determine 
in a measure the success he may expect to receive in future 
dealings with foreign customers. It can readily be seen that 
the traveling salesman who starts on his journey that will take 
him to different countries, different climes, and bring him in 
contact with peoples of different races, customs, habits and ways 
of thinking is charged with a responsible function. His job is 
to blaze a trail, to gain an entree and to inspire confidence in 
the strange manufacturer thousands of miles away who desires 
to sell articles to a skeptical buying public. Most likely it will 
be the first impression made that will decide for the native 
buyers. The impression the traveling salesman creates is the 
impression the manufacturer at home creates. 

Manufacturer Judged by 
Representative in Field 

The manufacturer is judged by the man he sends overseas to 
develop his business. The house stands to win or lose in the 

36 



THE TRAVELING SALESMAN OVERSEAS 37 

ratio of the ability or inability of the traveling salesman. If he 
is stupid or incompetent he puts the house in a bad light. The 
nation as a whole is included in the general criticism. He fur- 
nishes our foreign competitors with additional material for en- 
gaging in verbal essays on the "incompetency of the Yankees." 
An ignorant, ill-mannered, narrow-minded, dishonest or in- 
competent commercial traveler in the foreign field is worse than 
no salesman at all. With such disqualifications, he is not 
only incapable of selling goods, but capable of spoiling the 
market for the finest typewriter ever made or the finest auto- 
mobile or piano ever turned out from an American factory. The 
author recalls the experience in Buenos Aires of an electrical 
appliance salesman who felt that his time was more valuable 
than that of some of his "prospects." In his efforts to prove 
the accuracy of this theory he attempted to rush matters with a 
certain Argentine gentleman who was in the market for a con- 
siderable quantity of electrical parts for a business block of 
which he was proprietor. The order involved a big sum of 
money and was worth going after. The salesman failed to take 
into account, however, the fact that the temperament as possessed 
by a native merchant in Argentina is very much different from' 
that accredited to a business man in Lincoln, Nebraska, or Cadil- 
lac, Michigan. The former likes to take his time ; the latter has 
placards on the walls around his desk reading, "Don't put off 
until tomorrow 'what you can do today," or "Do it now," etc. 

As the salesman soon learned, the native refused to be rushed 
into the transaction, and later refused to have further dealings 
with him on the matter. A few weeks later another salesman 
carrying a similar line arrived from "The States." Through 
friends and business connections he learned of the native mer- 
chant's necessities. In time he was properly introduced. In con- 
versations with the prospect he seemed to show that he knew 
quite a little about the country, about its laws, business condi- 
tions, future and other matters. This pleased the native. By 
appointment they met often for luncheon. Later the American 
was invited to the home, where he met all the members of the 
family. While on the occasion of these meetings business was 
discussed, yet it did not have the right of way over other topics 
of common interest to buyer and seller. A few days before 
sailing for the United States — a month after his arrival in the 
city — the salesman received a visit at the hotel from the merchant, 



38 EXPORTING TO THE WORLD 

who asked to see his catalogue. Before he left the room he had 

signed a 

fixtures. 



signed an order for several thousand dollars' worth of electrical 



Traveling Representative 
Must Have Broad Vision 

The American manufacturer who contemplates sending a rep- 
resentative out on the foreign road on an initial tour of investi- 
gation should have a clear conception of the obligations which 
he imposes upon him. He is not only a seller of goods, but a 
judge of human nature. He is not only a carrier of samples, but 
the interpreter of the house's mission in the foreign fijeld. He 
must be capable of taking the initiative. He must exercise his 
own ingenuity. He must be enterprising. Obviously such tre- 
mendous responsibilities assumed thousands of miles from "the 
base of supplies'' cannot be imposed upon irresponsible and 
incompetent agents. In making his selection the manufacturer 
must watch his step. Negligence in the judicious consideration 
of the "personality element" may lead to disaster. The shoals 
of American foreign trade are strewn with the wreckage of 
ventures where too much attention was paid to promises and 
dreams and too little to proper qualifications and personality. 
The salesman must have a broad vision. He must have the 
international viewpoint. He must be capable of meeting people 
of different races, civilizations, traditions and manners. He must 
maintain a sympathetic attitude. He must be capable of judging 
conditions in foreign countries as they are and not as they should 
be. He must not be tempted to criticise things because they do 
not measure up to the standards he is accustomed to at home. 
He must remember that the chief function of his personal mission 
is to sell goods where they may help to raise the standard. He 
must know how to obtain essential information, such as credits, 
and to judge the trustworthiness of a customer without causing 
embarrassment. He must be able to analyze conditions as to 
transportation and distribution. He must judge of the buying 
power of the community in which his firm desires to do business. 
He must familiarize himself with the prevailing methods of 
financing shipments so that he may be able to quote prices to 
his customers with a certain degree of intelligence. 



THE TRAVELING SALESMAN OVERSEAS 39 

Knowledge of Language 
Is Not the Final Test 

The nationwide movement for the study of foreign languages 
deserves commendation. The American people should not only 
be able to read, write, think and speak in their own language, 
but they should also have a general knowledge of some impor- 
tant foreign language like French, Spanish, Italian or German. 
To know how to express one's self in a foreign tongue, especially 
in view of the desire of Americans to extend their summer trips 
to lands across the seas, is quite an advantage. This desire to 
master a foreign tongue should be encouraged. But never for a 
moment should the impression be permitted to run wild that for 
strictly business reasons the knowledge of one or two foreign 
languages is absolutely necessary. It is not. For over fifty years 
the American nation has been engaged in a lucrative foreign 
trade which has been growing and growing into large dimensions. 
Yet no one can justly claim that the American business men 
are experts in foreign languages. As a matter of fact it is neg- 
lect of this detail in connection with foreign trade expansion 
that has loosed a number of critics upon an innocent flock of 
embryo exporters, charging them with expressions of warning 
that they must be able to speak the tongue of the foreigner in 
order to get his business. 

Salesman's Ability to 
Sell Goods Comes First 

If the manufacturer relies solely on the salesman's ability to 
converse in any language from Russian to Chinese and not on 
his competency as a salesman of wares he is going to suffer by 
it. Selling ability, coupled, of course, with honesty, comes first. 
The case of a manufacturer who was induced to furnish a sub- 
stantial expense account and an adequate salary to a young 
Chilean who was to represent him in the country of his birth 
is recalled here. The young man, who knew nothing about busi- 
ness practice, but very much about his own country and people, 
'sold himself" to a manufacturer on the strength of this experi- 
ence at home. After several months of watchful waiting the 
manufacturer learned to his sorrow that his employe might have 
better served him in the capacity of a translator — for he was a 



40 EXPORTING TO THE WORLD 

graduate of a college of Liberal Arts, and not of a college of 
business experience. 

"Can you sell goods?" This is the first question that should 
be fired at the applicant. "I am, of course, deeply interested in 
your ability to speak Spanish or French, but my chief concern 
lies in your ability to convince the foreign buyer that he should 
give my article a trial." This should represent the manufac- 
turer's second step in considering the application. Then, having 
convinced himself by actual proof or record that the man before 
him is capable of selling his merchandise, the manufacturer must 
feel satisfied in his own mind after proper inspection that there 
is an air of good breeding and culture in the applicant that 
cannot be overlooked. Needless to say, neatness in personal 
appearance is a vital detail that very few successful salesmen, 
whether at home or abroad; seldom overlook. 

Sightseeing Salesmen 
Should Be Avoided 

A curiosity to see the world often inspires young men to enter 
the manufacturer's office looking for a traveling salesman's posi- 
tion in foreign countries. The manufacturer who is looking for 
permanent connections abroad should be on his guard against 
such applicants. A tour of the world should not be made at the 
expense of the manufacturer unless that tour is capable of com- 
manding adequate results. Salesmanship cannot be combined 
with pleasure. To make a tour of certain countries profitable for 
employer and employe alike the salesman should make it his 
vocation and not his avocation. The story is told of a manufac- 
turer who once permitted a young man to book orders for him 
in Australia. Ignorant of the methods of quoting prices to over- 
seas customers, the salesman was taking orders that were im- 
possible of fulfillment. The manufacturer at home was forced 
to cancel them by cable in order to avoid financial loss. It took 
much correspondence and many days in which proper explana- 
tions were finally made. 

Other Qualifications, 
Honesty, Responsibility 

That the manufacturer should carefully examine the appli- 



THE TRAVELING SALESMAN OVERSEAS 41 

cant's qualifications as to honesty and responsibility goes without 
saying. Honesty is the basis of all business relations. A dishonest 
and irresponsible salesman can easily destroy a manufacturer's 
business in a given market. There is no need of emphasizing 
the necessity of guarding against such representatives. The ex- 
perienced manufacturer can protect himself. It is the manu- 
facturer who is just branching into the foreign field and who is 
almost daily coming in contact with hundreds of men with hun- 
dreds of ideas of developing the foreign field who must be 
careful in the choosing. 

Courage and self-confidence follow honesty. The salesman 
should have the ability to hold his ground even in the face of 
adversity. In spite of discouraging results at the start he should 
have the ability to "stick to it." Of necessity he must put up 
with many inconveniences while on the road, and quite often his 
patience will be tried, but if he can survive these trials, in the 
end the harvest should be big. 

Salesman Should Prepare 
Himself Well for Trip 

There is considerable preliminary work ahead for the traveling 
salesman who is planning his first trip to foreign countries where 
the language and customs are different, where he will find him- 
self involved with different laws and regulations, and where prob- 
lems of marketing and transportation must be successfully solved 
before any measure of success in a selling campaign may be 
attained. He should begin at the factory. Here he should study 
the various products made, of what they are made and how 
they are made. A foreign customer's rapid fire questions involv- 
ing answers of a technical character may prove embarrassing to 
the salesman who is not well posted on his goods. While he is 
equipping himself with a knowledge of the production end of 
the business he should also be giving some time to the study of 
the countries through which he is to travel. He should know 
something about market conditions; he should know something 
about the climate, geography, language, customs, history, trans- 
portation facilities and regulations of each country. He should 
be well read. 



42 EXPORTING TO THE WORLD 

Study of Method of 
Travel Is Essential 

In planning his trip the salesman should prepare an itinerary 
so that he may have an approximate idea of the time his journey 
will require and the season in which he is to arrive in a certain 
country. His itinerary should not be ironclad, however, as the 
change in the date of a steamer sailing at one point may throw 
his schedule completely out of gear. The steamship companies 
are the proper sources for information as to routes, sailing dates 
and distances between ports. In preparing his tour the salesman 
must remember that the entire world does not enjoy the same 
seasons at the same time. When it is summer in the United 
States it is winter south of the Equator. The salesman who is 
planning to reach a certain market at the best buying season of 
the year should be very careful that his schedule does not take 
him to the market when his prospective customers are enjoying 
themselves at the seashore. 

Documents Salesman 
Should Carry Along 

The salesman should not leave the country without proper 
credentials indicating his authority. This is very important, as 
ij: is necessary to show some proof of power to transact business 
in certain countries. In Denmark, for instance, the agent must 
produce either an attest from his home government officials giv- 
ing his name and that of the firm which he represents, or a power 
of attorney issued by his firm and certified to by some notary public 
as well as by the Danish consul. If such document is not pro- 
duced within a certain time the salesman will be subject to a fine. 
The Danish authorities demand the following form: 

I, , one of the directors of the Joint Stock Com- 
pany or partner of the firm 

(New York), declare hereby that Mr is the 

company's traveling representative in Denmark. 

Countersigned New York, , 1919. 

Date 

Police Superintendent 

While this document is not absolutely necessary in every coun" 



THE TRAVELING SALESMAN OVERSEAS 43 

try visited, nevertheless good business judgment dictates that it 
or something similar should be in the possession of every sales- 
man who is going into foreign countries. A certificate from the 
President of the Chamber of Commerce, or from some other 
large organization is valuable to carry along. Letters from con- 
sular agents or other government officials will help where proper 
introductions to municipal or state authorities in foreign coun- 
tries are necessary before they are approached on business mat- 
ters. Letters of introduction are not necessary unless they are 
written to intimate friends or to persons with whom the writers 
of these letters have been in close relations through correspond- 
ence. The manufacturer's banker will provide the representative 
with letters of introduction to the managers of the branches in 
the different countries or to correspondents where there are no 
branches. These letters should not be neglected. They may 
help the salesman in obtaining valuable information. In some 
countries bankers refuse to give travelers any information unless 
they produce the necessary letters of introduction. This is usually 
the rule in certain British colonies. Passports should be carried 
along. They are very handy instruments when the unexpected 
happens in a foreign country. Properly viseed, they should form 
one of the list of valuable documents in the salesman's belong- 
ings. The passport bureau of the State Department should be 
consulted in connection with information regarding passports. 

Hoii' Salesman Obtains 
His Funds on the Road 

The banker's letter of credit is, perhaps, the most satisfactory 
instrument in the salesman's possession for obtaining funds along 
the various points on his journey. The banker's letter of credit 
has some advantages over other instruments aimed to achieve the 
same end. In the first place, it enables the manufacturer to 
finance the salesman's trip without actually drawing the entire 
amount from the bank at once. If the face value of the letter 
of credit represents $5,000 and the salesman draws $1,000 at 
some point in Europe the bank merely charges the manufacturer 
an equivalent amount against his balance. Banks and express 
companies are accustomed, also, to issue "traveler's checks" for 
the convenience of travelers. These "checks" command a higher 
rate of interest than the letter of credit, however, and must 



41 EXPORTING TO THE WORLD 

be purchased outright, thus compelling the manufacturer to draw 
out a lump sum equivalent to the entire expense involved in the 
trip. In connection with this topic it is proper at this time to 
call to the attention of the salesman the necessity of knowing 
something about foreign exchange. Total ignorance of this may 
cause him considerable financial loss as well as to render him 
incapable of discussing problems of international finance with 
his customers. 

Approximate Expenses 
of Traveling Salesman 

Tne expenses o± a traveling salesman depend on the nature of 
his mission. If he is to visit the regular trade and confine himself 
to very little entertaining it is possible that his expenses will be 
from $10 to $20 a day, including steamer, and railroad fares and 
hotel expenses. If, however, he has been engaged to interview 
some of the business men occupying high positions in foreign 
countries it will mean social life and entertaining. This comes 
high. If he carries many samples his expenses will be much 
higher than if he should carry only a few. 

License Fees and 

Payment of Duty on Samples 

In many countries of the world license fees are required from 
traveling salesmen. Also a duty is imposed on the samples car- 
ried. While it is impossible to make a definite statement regard- 
ing the fee and duty requirements in some European countries, 
it may be said for the information of the traveling salesman that 
in most Latin-American countries he will be compelled to pay 
a nominal license fee, sometimes a very high one, as well as a 
duty on the samples he carries along with him. As a general rule, 
however, samples without commercial value are usually admitted 
free of duty without special formalities, while other samples are 
admitted under bond or upon the deposit of an amount sufficient 
to pay the duty in case of failure to re-export them within a 
certain time limit. 

License Fees and Duties on 
Samples in Various Countries 

Owing to changing conditions in various countries it is difficult 



THE TRAVELING SALESMAN OVERSEAS 45 

to obtain definite data on license fees and duties on samples. 
However, a short digest of the requirements in some countries 
as collected by the Government Bureau of Foreign and Domestic 
Commerce will serve as a basis from which a start may be made 
to gather the latest possible information on these matters prior 
to starting out to foreign fields. In the countries listed here the 
following regulations prevail: 

Belgium — Commercial travelers exempt from payment of 
license. Samples deprived of their commercial value admitted 
free, otherwise subject to same customs treatment as goods they 
represent. 

Denmark — Commercial travelers must have power of attorney 
in order to obtain license, which is valid for one year. Samples 
subject to duty, but if re-exported within four months and proof 
furnished as to their identity, duty is returned. 

Iceland — Foreign commercial travelers must take out license 
in their own names. License fee is about $53.60 if traveler repre- 
sents but oa^ firm and about $13.40 for each additional firm. 
License good for one year from date. 

France — Commercial travelers may operate free. It is advisa- 
ble, however, that they produce documents showing that they 
are commercial travelers and not brokers. Brokers are subject 
to tax. Samples admitted free on condition of being re-exported 
within one year or placed within bonded warehouse. 

Greece — No license fees imposed on commercial travelers. 
Samples without commercial value admitted free, others charged 
regular duties under Greek customs tariff. 

Italy — No license restrictions. Samples of no commercial value 
admitted free, while those subject to duty admitted temporarily 
under deposit or bond to be refunded on re-exportation within 
one year. 

Netherlands — Only direct tax imposed on commercial travelers 
is on professional income, provided they are not domiciled in the 
country. Samples of no value admitted without duty. Samples 
of value granted temporary exemption. 

Norway — Trading license required for commercial travelers, 
which are good for thirty days. Samples not objects of trade 
admitted free of duty. 

Portugal— Any foreigner remaining in Portugal over period of 
seven days must obtain from his consulate "residence certificate," 
which must be endorsed by police authorities. Samples, except 



40 EXPORTING TO THE WORLD 

manufactured tobacco, free of duty provided duty leviable does 
not exceed 30 cents. 

Spain — Commercial travelers showing proof of employment in 
that capacity not subject to license fees. Samples without com- 
mercial value admitted free of duty. 

Sweden — Commercial travelers must obtain license, which is 
good for thirty days. Additional fee charged for every fifteen 
days after first thirty days. Samples of no commercial value not 
subject to duty, others subject to duty which is recoverable on re- 
exportation. 

Switzerland — No license fee required. All commercial travel- 
ers must have certificate of authority from proper authorities of 
their country showing that the house they represent is entitled 
to do business in the state in which it is situated. All commercial 
travelers must obtain permit. Samples of no market value ad- 
mitted free. 

United Kingdom — No permit or license required to enable 
commercial travelers to do business in the United Kingdom. 
Articles liable to duty on importation into United Kingdom serv- 
ing as samples introduced by commercial travelers from the 
United States and other countries having special treaties with 
Great Britain admitted free of duty subject to security or bond. 

Argentina — Commercial travelers required to obtain license in 
city of Buenos Aires when they carry samples; and separate 
license for every province and territory in which traveler desires 
to operate. In Federal District he is not required to take out 
license if he sells from catalogue and without samples. Fees 
payable for this license in the various provinces differ in amount. 

There is a way of avoiding payment of these licenses, how- 
ever. American firms, as well as European houses, usually assign 
their travelers to some large importing house established in 
Buenos Aires, under whose auspices they work, thereby avoiding 
payment of any license fee. Even when the traveler goes into 
the provinces he need not pay additional licenses, because these 
importing houses usually maintain agencies or branches in the 
principal cities to which the traveling salesman is assigned. Pay- 
ment of license fees in each of these provinces would involve a 
large sum of money. Samples having no commercial value are 
admitted free. Others may be brought under bond. 

Bolivia — Each city imposes local tax, which is compulsory. 
Collection of taxes on commercial travelers rests with conces- 



THE TRAVELING SALESMAN OVERSEAS 47 

sionaires, from whom travelers may obtain a reduction from the 
rate fixed by municipal ordinance. Samples having no commer- 
cial value may be imported duty free, while others may be im- 
ported under bond. 

Brazil — No license for commercial travelers required by the 
Federal Government, although there is a tax in some States. 
Samples admitted free under bond only when goods are accom- 
panied by consular invoice from the country of origin and a 
memorandum setting forth in detail the articles contained in the 
various packages. 

Chile — No licenses are required. Salable samples may be im- 
ported for period of six months upon security furnished by local 
business house to cover full amount of duty to which samples 
would be subject as merchandise or upon cash deposit of equal 
amount by importer. 

Colombia — No license required for commercial travelers. Some 
cities have municipal tax and traveler must secure license before 
exhibiting samples. Consular invoice in Spanish covering sam- 
ples and certified by Colombian consul at port of embarkation 
necessary. Samples may be imported temporarily upon payment 
of full duty, with refund of 75 per cent, of duty upon re-exporta- 
tion. Samples of no commercial value admitted free. 

Costa Rica — Commercial traveler is required to obtain from 
municipal treasurer permit to do business in the district, w T hich 
is only valid within the municipal limits. License fees vary in 
each district. Samples without commercial value dutiable at 
$1.05 per hundred pounds. Samples of value intended to be re- 
exported subject to duty, which will be returnable upon certain 
conditions. 

Cuba — No license required for commercial travelers. All sam- 
ples of dutiable merchandise pay full duty upon entry, but if re- 
exportation is effected within ninety days and value is not over 
$500, 75 per cent, of the duty will be refunded. 

Dominican Republic — Commercial travelers must take out an- 
nual license, which costs $10. Unsalable samples admitted free. 
Samples not exceeding $2,000 in value may be admitted free 
under bond. 

Ecuador — Commercial travelers require license from inspector 
of customs before baggage and samples will be permitted to enter 
country. Samples of value admitted under bond. 

Guatemala — No licenses are required for commercial traveler. 



48 EXPORTING TO THE WORLD 

All samples, except those without commercial value on which 
duty does not exceed 1 peso, subject to regular duties unless 
rendered unsalable. If samples are to be re-exported no duty is 
charged upon providing bond. 

Haiti — Commercial travelers require permit from the Depart- 
ment of the Interior, to be obtained before the traveler leaves the 
city for. another part of the country. Samples of no commercial 
value admitted free of duty. 

Honduras — Commercial travelers are subject to municipal 
license fees only. Samples destined to be re-exported admitted 
on deposit equal to amount of duty leviable. 

Mexico — Laws governing commercial travelers unobtainable 
owing to abnormal political conditions. Samples of commercial 
value dutiable, but admitted under bond subject to re-exportation. 
Nicaragua — Commercial travelers not subject to license fees. 
Bond required on samples brought in and subject to re-exporta- 
tion. 

Panama — All commercial travelers must take out municipal 
license in district in which they are to transact business. Samples 
of commercial value subject to re-exportation admitted under 
bond. 

Paraguay — Commercial travelers must take out municipal 
license. Samples of commercial value admitted upon payment 
of duty, which is refunded upon re-exportation. 

Peru — Commercial travelers not required to take out govern- 
ment license, but are subject to municipal taxes in interior towns. 
Samples of any kind not prohibited by customs laws may be 
imported free for limited time under certain conditions. 

Salvador — The only official license required of a commercial 
traveler is issued by the local municipalities. All samples im- 
ported free under bond, which is canceled upon re-exportation. 
Uruguay — Commercial travelers required to take out a license, 
which is valid for one year. Samples of any kind may be tem- 
porarily imported free of duty by giving bond to guarantee re- 
exportation. 

Venezuela — No licenses are required from commercial travel- 
ers. Samples of commercial value admitted free subject to bond 
to guarantee their re-exportation. 

Australia — There are no laws or regulations affecting com- 
mercial travelers. Dutiable samples admitted upon depositing 
duty with customs, which will be refunded upon re-exportation. 



THE TRAVELING SALESMAN OVERSEAS 49 

New Zealand — Warrant free of charge is issued to commer- 
cial travelers, but those who seek to avoid it are subject to fine. 
Samples dutiable, but when re-exported, refund is made. 

It will be seen from this resume that the commercial traveler 
is subjected to different license fees in all parts of the world. In 
some places these fees are rather high and it is possible, as has 
been already suggested in connection with the Argentine require- 
ments, to avoid them in some countries by making connections 
with establishd importers. It is an easy matter to do this when 
the salesman is employed by an American concern having 
branches or agencies in foreign countries; but where the sales- 
man or the house may be unknown a proper letter of introduc- 
tion may effect some sort of connection in which the high license 
fee may ethically be avoided. 

The salesman will also save himself considerable trouble by 
having with him several copies of an invoice of his samples so 
that the customs officials may expedite the examination of his 
baggage. The invoice should include the full description of the 
articles, gross and net weights in pounds and kilos, and the 
values at which they would be sold to the trade. These invoices 
should be viseed by the consuls of the countries to be visited. 

The Combination Traveling 
Salesman in Export Trade 

As the United States is extending its trade more and more 
every day new problems are being constantly presented to the 
manufacturer who has joined the growing list of exporters. One 
of these problems involves economy in developing the field by 
personal representation. The manufacturer who foots the entire 
bill in sending a salesman to certain foreign countries will learn 
that it is rather expensive. There is a way to avoid this heavy 
expense, however, and at the same time obtain proper representa- 
tion in the foreign field. This is by using the services of a sales- 
man who undertakes to carry one or several lines on a business 
tour of several countries. This kind of commercial traveler is 
commonly known as a combination traveling salesman. 

The combination traveling salesman operates along the follow- 
ing lines: He decides on a certain territory to be covered; he 
studies the possibilities of that territory for the sale of certain 
articles the representation of which he will endeavor to obtain 



50 EXPORTING TO THE WORLD 

after he is satisfied that there is a market for them. He then 
places his proposition before the manufacturers of these articles, 
offering to solicit the foreign trade upon the payment of a def- 
inite proportion of his entire expenses on the trip. Each manu- 
facturer in the combination must contribute his proportion of 
the expense. In some cases the combination salesman obtains a 
commission and in others a definite salary. It is generally on a 
commission basis plus expenses, however, that the arrangement 
between manufacturers and combination salesmen is completed. 

Combination Salesman 
Must Be Qualified 

Economy should not be the bait upon which the manufacturer 
is to be drawn into a combination salesmanship proposition. The 
combination salesman must be as fully qualified for foreign work 
as the salesman who is the sole representative of a single house 
in the United States. Unless he possesses the necessary attrib- 
utes the saving to be gained by the combination may result in 
loss in some other way. There is no denying the fact, however, 
that an intelligent and competent representative should be capable 
of splendid service to the manufacturer to whom the combina- 
tion idea may appeal. It has been tried before and satisfactory 
results have been obtained. In order that the manufacturer may 
seriously consider his proposition, however, the combination 
salesman must prove that he not only has had experience as a 
salesman, but that he has had experience in the field to be cov- 
ered, that he knows prospects and business conditions in the pro- 
posed territory, and, finally, that he has a general knowledge of 
the language in that territory. In addition to this, good judg- 
ment as to credits and market conditions are valuable. 

How Manufacturer May Be 
Approached by Salesman 

Personal solicitation is the most effective method of reaching 
the ear of the manufacturer on a proposition such as the combi- 
nation salesman is proposing. Letter writing is inadequate. A. 
personal talk with the salesman will give the manufacturer a 
better idea of the capabilities of the man than perhaps a hundred 
letters. The combination salesman who resides in a large port 



THE TRAVELING SALESMAN OVERSEAS 51 

like New York City has a fine opportunity of interviewing a 
select number of manufacturers who may be interested. Even 
then the matter of getting together a number of manufacturers 
will not be so easy. The combination salesman's plan should be 
something like this: (a) Select goods with which he is best 
acquainted; (b) develop a sales plan consistent with the territory 
he is to cover; (c) approach most desirable manufacturers of 
articles he has listed for his combination. The salesman should 
be careful that his combination involves only allied lines if pos- 
sible. It will make his work much easier. 

It is possible that the manufacturer himself, with a number of 
others, may desire to form a combination on their own initiative. 
In this case a successful combination may be worked up by having 
each manufacturer contribute his best line to the combination, 
agree on a fixed amount to be spent, and on one executive to select 
a salesman and direct his efforts in the foreign field. The virtue 
of such arrangement lies in centralized authority, and the ship- 
ment of goods on one bill of lading, and, possibly, the financing on 
one draft. The advantages of this method, however, may be lost if 
the combination does not work in harmony. Petty jealousies may 
destroy its efficiency, and finally the combination itself. 

Advantages of the 
Combination Salesman 

A single house may spend $6,000 on a trip by a personal repre- 
sentative to South America or to the Far East. Six houses 
joining in a combination where one salesman has agreed to carry 
the various lines of each house to either of these foreign fields 
would contribute their proportion of the total — say, $1,000 each. 

The advantage of a combination salesman, it will be seen, lies 
in the economy of the plan. Again, the manufacturer may have 
a "short line" that may not justify intensive selling methods 
abroad. The combination salesman may find it to his advantage 
to carry this "short line," particularly if it is allied to the other 
products he already represents. An assorted line of kindred 
products will attract more buyers than one line alone. Any one 
of the manufacturers represented in the combination, therefore, 
will have a better chance of obtaining a trial order than if they 
were alone in the field. The "short line" manufacturer has as 
good a chance as the others. 



52 EXPORTING TO THE WORLD 

Objections to a 
Combination Salesman 

The combination salesman who carries many lines must of 
necessity "scatter his shot." He cannot pay too much attention to 
one line at the expense of the others. This is more often the 
case where the combination salesman represents several lines 
that have no relation to each other. A salesman handling lines 
ranging from needles to pianos may not be as successful as one 
who handles allied lines. The failure of many combination sales- 
men in the foreign field has been due to the neglect of this im- 
portant phase of the plan. In the smaller cities it is possible to 
sell the dealers almost anything, but when the larger cities are 
approached it will be necessary for the combination salesman 
who handles unrelated wares to cover a wide buying field at the 
expense of valuable time which could be devoted exclusively to 
certain classes of dealers if he were handling a combination of 
kindred lines. The reason for the selection of these diversified 
lines is because it is the salesman's own "idea." Perhaps, if left 
to the initiative of a combination of manufacturers a better selec- 
tion may be made, and better results obtained in the foreign field. 



DISTANCES TRAVELERS SHOULD KNOW 



A Table showing the distances from New York, New Orleans, San 

Francisco and Port Townsend to world's principal ports and cities 

that may give a salesman an idea of distances to be covered %w 

traveling in foreign countries. 

(Routes by water in nautical miles; land routes in statute miles) 

Foreign Cities 

PORT AND ROUTE. New New San Fort 

York. Orleans. Francisco. Townsend. 

Aden— Suez Canal 6,532 7,870 

Cape of Good Hope 10,985 11,408 

Suez Canal and New York 9,723 9,731 

C. of Good Hope & N. Y 14,176 14,184 

Suez and Tehuantepec 9,500 10,300 

Suez and Panama 10,800 11,600 

Suez and Magellan Strait 15,900 16,700 

Singapore 11,500 11,300 

Singapore & P. Townsend 14,499 14,279 



THE TRAVELING SALESMAN OVERSEAS 53 

_ , __ _ nTT _ p New New San Port 

PORT AND ROUTL. York. Orleans. Francisco. Townsend. 

Antwerp 3,325 4,853 

New York 9,059 9,067 

Panama 8,264 9,039 

Magellan Strait 13,671 14,446 

Batavia (Java) 7,800 7,600 

Panama 13,167 12,566 

Suez Canal 10,182 11,598' 

Cape of Good Hope 11,855 12,278 

Bombay— Suez Canal 8,120 9,536 

Cape of Good Hope 11,250 11,848 

Suez and New York 11,311 11,319 

C. of Good Hope & N. Y 14,441 14,449 

Suez and Panama 12,512 13,287 

C. of G. Hope & Panama 14,500 15,270 

Magellan Strait 15,064 15,839 

Singapore 9,780 9,580 

Singapore & P. Townsend 12,771 12,559 

Singapore & San Francisco 12,971 12,262 

Singapore and Panama. . . 14,837 14,236 

Buenos Aires 5,868 6,318 

Magellan Strait 7,511 S',286 

New York 9,059 6,067 

Bermuda 676 1,648 

New York 3,867 3,875 

Calcutta — Suez Canal 9,830 11,239 

Cape of Good Hope 12,180 12,838 

Suez and New York 13,021 13,029 

C. of Good Hope & N. Y 15,371 15,379 

Singapore 8,990 8,896 

Singapore & San Francisco 12,181 11,462' 

Singapore and Panama. . . 14,230 13,694 

Panama 3,392 2,764 

Magellan Strait 9,603 10,142 

Direct 4,012 4,769 

Cape Town — Direct 6,815 7,374 

New York 10,006 10,014 

Panama 9,898' 10,676 

Magellan Strait 10,454 11,229 



54 EXPORTING TO THE WORLD 

r>^T><T« Axm nniwp New New San Port 

FORT AND ROUTE. Y orl?. Orleans. Francisco. Townsend. 

Colon (eastern end of Pana- 
ma Canal) 1,981 1,380 

Canal and Panama 3,324 4,090 

Copenhagen — Direct 3,852 5,443 

New York 7,043 7,051 

Panama 7,642 8,417 

Magellan Strait 12,734 13,509 

Guam 5,054 4,908 

San Francisco 8,245 7,536 

Port Townsend 8,107 7,887 

Hamburg 3,652 5,243 

New York 6,843 6,851 

Pernambuco, Brazil 3,696 3,969 

New York 6,887 6,895 

New Orleans 6,451 6,948 

Panama 6,530 7,305 

Magellan Strait 9,439 10,214 

Port Said, Egypt 5,122 6,509 

New York 8,321 8,327 

Panama 9,562 10,337 

Punta Arenas (Magellan S.) 6,890 7,340 6,199 6,958 

Rio de Janeiro 4,778 5,218 

New York 7,969 7,977 

New Orleans 7,700 8,197 

Panama 7,678 S',453 

Magellan Strait 8,339 9,114 

San Francisco 3,191 2,482 

Panama 5,305 4,704 

Petrograd— Direct 4,632 6,223 

New York 7,823 7,829 

San Juan, P. R 1,428 1,539 

New York 4,619 4,627 

New Orleans 4,021 4,518 

Panama 4,345 5,120 

Magellan Strait 12,199 12,974 

Shanghai 5,550 5,290 

San Francisco 8,741 8,032 

Port Townsend 8,489 8,269 

Panama 10,855 10,254 



THE TRAVELING SALESMAN OVERSEAS 55 



New 
PORT AND ROUTE. York. 

Suez 12,360 

Cape of Good Hope 14,593 

Singapore 

San Francisco 10,693 

Port Townsend 10,405 

Suez 10,170 

Cape of Good Hope 12,914 

Habana 1,227 

New Orleans 

Panama 

Havre 3,169 

New York 

Hongkong 

Port Townsend 9,085 

San Francisco 9,277 

Panama 11,431 

Suez 11,610 

Cape of Good Hope 13,590 

Magellan Strait 16,868' 

Honolulu 

San Francisco 5,288 

Port Townsend 5,569 

Panama 6,686 

Magellan Strait 13,269 

Kingston, Jamaica 1,473 

Kongo River, mouth of 5,662 

New Orleans 

New York 

Liverpool 3,053 

New York 

Panama 

Magellen Strait 

London 3,233 

New York 

Panama 

Magellan Strait 

Manila — Honolulu and San 

Bernardino Strait 

Yokohama 



Now 
Orleans. 


San 
Francisco. 


Port 
rownsend, 


13,750 






14,806 








7,502 


7,206 


9,984 






10,185 






11,560 






12,355 






597 








3,079 


4,006 




4,337 


5,112 


4,760 








6,360 


6,368 




6,086 


5,886 


8,865 







8,568 






10,830 






12,892 






13,863 






17,318 








2,097 


2,370 


4,579 






5,349 






6,085 






13,719 






1,165 






6,580 








9,062 


9,559 




8,853 


8,859 


4,553 








6,244 


6,250 




8,038 


8,813 




13,503 


14,278* 


4,507 








6,424 


6,432 




8,218 


8,993 




13,683 


14,458 




6,943 


7,213 




6,289 


5,993 



5f. EXPORTING TO THE WORLD 

•ns-N-nrr. . > T ^ „ rtTTrnT , New New San Port 

PORT AND ROUTE. York. Orleans. Francisco. Townsend. 

Yokohama & S. Francisco 9,480 8,771 

Yokohama & P. Townsend 9,192 8,972 

Panama 11,546 10,993 

Suez 11,556 12,946 

Cape of Good Hope 13,536 13,986 

Suez and New York 14,747 14,755 

C. of Good Hope & N. Y. 16,727 16,735 

Magellan Strait 16,736 17,145 

Marseilles 3,876 5,266 

New York 7,067 7,073 

Panama 8,332 9,107 

Magellan Strait 13,324 14,099 

Melbourne 7,040 7,311 

San Francisco 10,231 9,522 

Panama 10,028 9,427 

Magellan Strait 12,8*80 13,143 

Suez Canal 12,981 14,303 

Cape of Good Hope 12,670 12,933 

Mexico City, land and water 2,399 1,172 2,142 2,917 
Mexico City, land and water 2,898 1,526 2,512 3,349 
Naples 4,172 5,562 

New York 7,363 7,369 

Panama 4,704 5,479 

Nome, Alaska 2,705 2,356 

San Francisco 5,896 5,187 

Port Townsend 5,555 5,335 

Panama 8,010 7,410 

Magellan Strait 15,840 16,249 

Odessa, via Gibraltar 5,370 6,760 

Panama (western end of 

Panama Canal) . .- 3,277 4,052 

Panama Canal and Colon. . 2,028 1,427 

Yokohama and Panama. . . 13,104 12,503 

Yokohama & Tehauntepec 12,209 10,961 

Tehuantepec — western end 

of railroad 2,189 2,964 

Eastern end of railroad .. . 2,036 812 

Valparaiso 5,140 5,902 

San Francisco 8,331 7,622 



THE TRAVELING SALESMAN OVERSEAS 57 

ns-t-nm * n-r-rx tiatttc New New San Port 

PORT AND ROUTb. York. Orleans. Francisco.Townsend. 

Panama 4,637 4,035 

Magellan Strait 8,460 8,733 

Vladivostok 4,706 4,357 

San Francisco 7,897 7,188 

Port Townwsend 7,556 7,336 

San Francisco and Panama 10,001 9,410 

Magellan Strait 17,036 17,445 

Wellington, New Zealand 5,909 6,415 

San Francisco 9,100 8,391 

Panama 8,540 7,939 

Magellan Strait 11,500 11,773 

Suez 14,230 15,620 

Cape of Good Hope 13,710 14,058 

Yokohama 4,536 4,240 

Honolulu 5,500 5,770 

San Francisco 7,727 7,018 

Port Townsend 7,439 7,219 

Honolulu and Panama 10,093 9,492 

San Francisco and Panama 9,869 9,268 

Magellan Strait 16,205 16,614 

Singapore and Suez 13,040 14,471 

Cape of Good Hope 15,020 15,443 



Chapter VI 

CORRESPONDENCE IN EXPORT TRADE 

Essentials in export correspondence— Careful translators 

necessary same language differs in various countries 

Parcel post as means of developing business through 

correspondence 

It has been said quite often that it is impossible to build up an 
export trade purely on correspondence — that the logical formula 
involves the dispatching of a personal representative to the 
objective market as well as the probable establishment of branch 
offices or the appointment of resident foreign agents. This is 
partly true only. Successes by American manufacturers have 
been made in foreign fields through the exclusive use of the 
mails. Other attempts have ended in sad failures. The skillful 
and competent handling of correspondence in a manner con- 
sistent with the temperament and psychology of the person who 
is to receive it in a foreign country usually determines the suc- 
cess that a manufacturer will achieve in foreign trade regardless 
whether he uses the mails exclusively to build up his trade or 
whether he sends personal representatives to the chosen markets. 

Correspondence plays a major part in export trade. It serves 
as the line of communication between the source of supply and 
the market. Sometimes it serves as the only line of communica- 
tion through which buyer and seller may get together for the 
purpose of transacting business. For nearly forty years a 
marine engine manufacturer in Western New York has been 
engaged in shipping his products to customers he has never 
known or seen personally. During this long period of pioneer 
work there has never been a representative of this corporation 
in this foreign soil. It was unnecessary. It was too expensive. 
Correspondence during all these years has been sufficient. 

A Pennsylvania representative of a pumping machinery manu- 
facturer, a pioneer in the export field, for nearly half a century 
has enjoyed a large volume of business from foreign customers. 

58 



CORRESPONDENCE IN EXPORT TRADE 59 

These customers have never seen a personal representative from 
this house, yet they are satisfied. 

The history of American foreign trade is replete with chapters 
of successful careers in exporting through correspondence. 
With the betterment of the means of communication between 
the principal centers of the world, the addition of mail steamers 
that ply between ports on regular schedules, and the improve- 
ment of communication in sparsely settled regions, the handling 
of business with foreign customers through correspondence is 
becoming less difficult. 

Essentials in Export 
Correspondence 

There are some things that may be incorporated in a letter to 
a domestic customer that would be entirely "out of order" in a 
letter to a foreigner in a strange country. It is possible and 
often permissible to use a "breezy" style when writing to a 
customer in Seattle. It may be good business to pat him on the 
back, so to speak, and to call him by his first name, and to say 
that he has certainly "delivered the goods," and won't he please 
try to deliver another "knockout" the coming month, etc. But 
this will never do in foreign correspondence. 

The tone of correspondence intended for foreign consump- 
tion must be regulated to fit the peculiarities of each indi- 
vidual country. If it has lacked dignity in the domestic field 
it must have it in the foreign field. If it has been slangy at 
home the blue pencil must delete these literary characteristics 
peculiar to the American vocabulary. If the sense of courtesy 
has been pigeonholed it must be brought out and carefully ap- 
plied to foreign correspondence. Courtesy is an essential in 
letter writing to foreign countries. Although courtesy is inex- 
pensive it is invaluable. The letter may be the only means by 
which a manufacturer can be introduced to a customer he has 
never seen. If the letter is written in a courteous, dignified and 
business-like tone it will impress the customer. If an opposite 
style is adopted it will be consigned to the waste basket. 

Avoid Impertinences in 
Foreign Correspondence 

Foreign business men are not accustomed to giving informa- 



60 EXPORTING TO THE WORLD 

tion about their business as in the United States. They regard 
forms and other blanks in which questions are asked regarding 
business standing, credit rating and other details as reaching the 
Nth power of impertinence. The story of how an American 
house "got its foot into it" several years ago in Panama is told 
by Mr. Gerrard Harris, a special agent of the United States 
Government Department of Commerce, in one of the depart- 
ment's export trade publications. 

"Most Latin-Americans do not at all approve of the very blunt 
and searching questions asked by some business house in an 
endeavor to obtain credit information," says Mr. Harris in the 
article. "The tropical dealers are not accustomed to these ques- 
tions and resent them. The English and Germans get their data 
on business houses in a less direct manner. An incident of how 
the 'credit blank* is usually received was related to me by a busi- 
ness man in Panama. There called upon him a likable young 
salesman representing a concern in the United States. The 
Panamanian did not really need anything in his line, but the sales- 
man made a very good impression; a friendship sprang up, and 
the Panamanian, purely out of personal regard, gave him an 
order for $150 worth of goods, intending to pay cash for them, 
within thirty days. He promised to save a big order for the 
salesman on the next trip. The latter sent the order in and 
went on his way rejoicing. Now, that firm was well known in 
business in Panama for many years. Dun or Bradstreet could 
instantly have given its rating, and it is a good one. Any bank 
in Panama would have said the firm was good for $25,000, to 
say nothing of the $150. Next thing, the merchant received a 
long, imposing question blank asking questions concerning his 
wealth, whether he had been in bankruptcy, the amount of his 
debts and to whom, the volume of his business, his profits, refer- 
ences, and so forth, at length. He wrathfully wrote on the blank 
that he considered the questions impertinent, offensive, unneces- 
sary, and a reflection upon him. Adding a fervent request that 
the firm keep the goods, he mailed the blank. Upon its receipt 
the house did some hasty investigating and shipped the goods. 
The Panamanian sent New York exchange for them before he 
had even taken them out of the custom house, and said nothing. 
In the course of time the young salesman came back, joyfully 
expecting the big order. The merchant greeted him cordially 
and invited him into a big $4,000 touring car. As they rode 



CORRESPONDENCE IN EXPORT TRADE 61 

about, the native pointed out some buildings. 'See that three- 
story block ? It is mine. And that apartment house ? Mine also. 
The next one is my brother's; he is my partner. Yonder is 
another block we own jointly. I am director in that bank. I 
own a great deal of stock in that bank yonder.' The auto trip 
finished, the salesman was driven to his hotel. 'I just wanted 
you to see things for yourself,' said the merchant, and then with 
rising indignation told how the house represented by the young 
man had doubted him on a small order of $150. T like you per- 
sonally,' he continued, 'but there will be no big order for you 
or any other order as long as you are with a house that has that 
style of business. Always come and see me — personally — and 
if you get a better house I will give you business ; but this one, 
nothing for them/ " 

A striking example of how not to handle foreign correspond- 
ence is given in the foregoing story. 

Tell the Whole Story 

in Foreign Correspondence 

It takes a letter about forty days to travel from New York to 
Siam, and about twenty-two days from New York to Valparaiso. 
Some of these far-away countries have as yet inadequate steamer 
connections with other parts of the world. Mail does not arrive 
every day. Consequently, the arrival of a steamer with pouches 
full of mail is the occasion of an important event in many foreign 
ports. Several weeks usually pass before the foreign merchant 
receives his business correspondence. When he does get it, 
he expects full information, if it is a letter in answer to an 
inquiry. If a strange American manufacturer is submitting 
a proposition his interest in it will depend on the care with 
which the correspondent prepared the communication. Has the 
letter explained everything accurately? Has it been thorough 
in its description? If the foreign customer is interested must he 
write for further information, which will mean another month 
or two of delay? Has it the air of courtesy? 

These are some of the questions the correspondence depart- 
ment of the American firm must answer before dropping the 
letter in the mail box. In writing a letter to a foreign customer 
the manufacturer should endeavor to see things from the other 
fellow's viewpoint. He should assume that the customer knows 



62 EXPORTING TO THE WORLD 

nothing of his product, nothing of the way in which it is made, 
nothing of the business practices of the house, nothing of his usual 
conditions of sale, and nothing of the manufacturer himself. Once 
acquiring this mental attitude he is then prepared to write a 
letter couched in plain words, in a dignified and courteous tone, 
and giving full information so as to enable the foreigner to 
understand the proposition thoroughly without the necessity of 
further correspondence. 

Letter Should Be in 
Language of Customer 

Out of pure courtesy, if nothing else, the language of the 
person who sends an inquiry from a foreign country to an 
American firm should be employed in the answer. There are 
times, however, when the use of any one of the principal commer- 
cial languages of the world, such as English, Spanish, German 
or French, may be made. In all the principal commercial centers 
there may be found big business men engaged in the importing 
business. These men, through years of travel in foreign coun- 
tries, have acquired a knowledge of one or two foreign tongues. 
In writing to some of these big houses the letters may be written 
in English. When the correspondence involves a large clientele 
and territory, however, good business practice commands that 
the letters should be written in the language of the country for 
which they are bound. 

Promptness in Answering 
Inquiries Necessary 

It should be the rule of every American manufacturer to 
answer all communications in which inquiries are made by for- 
eign writers. Sometimes their seeming unimportance causes the 
manufacturer to hurl them into the waste basket. It is difficult 
to measure the importance of a communication by the character 
of the letterhead. A communication from the interior of Peru, 
although written on cheap stationery, may be from a farmer who 
wants to buy machinery or from a priest who needs material 
for a new church. There should be no delay in answering these 
letters. There has been considerable complaint in late years 
against American houses that have failed to respond to letters 



CORRESPONDENCE IN EXPORT TRADE 63 

of inquiry. Complaints also arise from the failure of American 
manufacturers to promptly confirm transactions which have been 
closed by cable. This may leave the customer or agent at the 
other end in doubt as to whether the transaction is clearly under- 
stood. American manufacturers should confirm by letter all 
cables sent or received on the date on which they are sent or 
received in order that any misunderstanding arising from the 
use of a code may be corrected without delay. Too often manu- 
facturers neglect to comply with requests from foreign corre- 
spondents for information accompanied with specific instructions 
as to how that information is to be given. An American consul 
in Italy writes that Italian merchants are very much disappointed 
at the failure of American firms to follow instructions, and have 
refused to make connections. The consul writes: "In nearly 
every case where the inquirer has been approached for his 
reasons in not making direct connections with American houses 
from which he has received quotations the blame has been placed 
on the American correspondents who have not complied with the 
requirements as to the use of the Italian language and of the 
metric system. ... It should be explained that local inquirers 
have excellent reasons for requesting correspondents to comply 
with these indispensable features. In most cases the business is 
conducted by one man who maintains an extremely small staff, 
and consequently he has neither the time nor the inclination to 
have letters translated and the terms and measures converted into 
the system with which he is familiar." 

Value of Signature in 
Foreign Correspondence 

A typewritten signature attached to a circular letter is bad 
form. It is bad form anywhere. Sometimes even a rubber 
stamp signature is resented. The American consul at Hankow, 
China, writes as follows: 'The Hankow consulate would like 
to draw the attention of American firms attempting to enter the 
foreign trade to the practice on the part of some of them in 
communicating with foreign concerns of sending out trade letters 
with no written signature, but with only a typewritten signature, 
usually the name of the firm alone. This is almost invariably 
construed by foreign merchants as an indication that the Ameri- 
can house which does it lacks any real interest in the possible sale 



64 EXPORTING TO THE WORLD 

of its goods abroad. The result of this policy is well illustrated 
by a remark made to the writer by the local manager of a foreign 
firm. His statement was to the effect that when he receives a 
trade letter from America, if he sees that the inquirer is suffi- 
ciently interested in the marketing of his goods to sign his letter, 
he always gives such communication the courtesy of a reply, 
while if he notices that no signature is affixed to the letter it is 
promptly consigned to the waste basket." 

American firms should bear in mind the attitude of this foreign 
merchant, as his attitude reflects the frame of mind of business 
men in other lands as well, respecting a typewritten signature. 

Necessity of Knowledge of 
Language of Foreign Customers 

Before communicating with a customer in a foreign country 
the manufacturer should be sure that he is employing the proper 
language. The merchants of Brazil resent letters received in 
Spanish, even though the country is in what is commonly known 
as "Latin- America." Brazil was once a Portuguese colony and 
the country was inhabited by people of Portuguese origin. One 
may suspect that Jamaica is a Spanish-speaking island because 
of its geographical position. Jamaica is a British colony, and 
the inhabitants speak English. The three Guianas — British, 
French and Dutch — contain populations speaking the language 
of the countries that control them. A young American, a few 
years ago, started to study Spanish in anticipating a trip he was 
preparing to take to Haiti. However, before he arrived there he 
learned that his awkward Spanish would be needless in a country 
where the native population had been brought up on French. 
Firms should nrst learn what language is used in the foreign 
country to which their letters are to be sent. It may save them 
considerable embarrassment. 

Translations Should 
Be Carefully Made 

There is more difficulty among American manufacturers in 
obtaining proper translations of letters than any other service in 
connection with their export problems. Employers experience 
little difficulty in obtaining any number of competent office clerks 



CORRESPONDENCE IN EXPORT TRADE 65 

to handle the routine of the business, but when it comes to finding 
competent translators who should correctly interpret English com- 
munications so that they may be intelligently translated into the 
required foreign language, these employers are hard pressed. 
The following classes of translators usually apply for positions : 

(a) Americans who have learned a foreign language in the 
schools of this country, or through some popularly advertised 
method. 

(b) Americans who have learned a foreign language in a for- 
eign country, and who are able to read, speak or write it. 

(c) Foreigners who have a good knowledge of English as well 
as a thorough knowledge of their own language. 

(d) Foreigners whose knowledge of English is limited, al- 
though having a thorough knowledge of their own language. 

(e) Americans of foreign descent who have retained a good 
knowledge of the language of their parents. 

Of these five classes perhaps the best qualified are those falling 
in classes b, c and e. Those coming in class a should never be 
considered. "Canned" translations only would result from the 
efforts of this class. It is possible that the best results may be 
obtained from class c. Having a practical knowledge of English 
the translator falling under class c is well equipped to "get the 
idea" behind a letter, and with his skill in the foreign language 
necessary he can use his own words and idiomatic expressions 
and yet retain the original meaning of the communication. A 
professional translator has this to say about the technique of 
interpreting English into a foreign tongue: "In order to be a 
competent translator of American business literature a translator 
must not only be perfectly familiar with English and equally 
familiar with the language into which he is to translate, but he 
must also be able to grasp the full meaning of the original 
matter, no matter how technical it may be. In most instances 
such work is extremely difficult and requires a high degree of 
education and intelligence as well as linguistic ability." 

The same writer goes on to say: "In the course of my experi- 
ence, in translating and in observing the work of other trans- 
lators, I have found that the production of a translation which 
reads exactly like the original copy, and yet conveys the precise 
meaning to a foreigner, is a feat seldom achieved. The most 
successful translations, in fact, convey the spirit rather than the 



6G EXPORTING TO THE WORLD 

language of the original, while the literal translation is generally 
a complete failure." 

Smne Language Differs 
in Many Countries 

The greatest care should be taken in translating a letter into a 
language that is used in several different countries. We know- 
that the English as spoken in London and the English as spoken 
in New York is quite distinct. The same is true of Por- 
tuguese as spoken in Portugal and that spoken in Brazil. The 
Spanish of Mexico differs from the Spanish of Chile and Argen- 
tina, and the Spanish of Peru and Paraguay differs from the 
Spanish of Ecuador and Cuba. These countries have their 
own idiomatic expressions and colloquialisms, and only a very 
skillful translator is able to prepare Spanish copy that is com- 
pletely understood in all of those countries where Spanish is the 
native tongue. Certain American publications have attempted 
to solve this problem by having their articles translated into pure 
Castilian. While this plan seems to have the approval of many 
authorities on the subject, yet it is admitted that considerable 
difficulty is often experienced in translating certain technical 
expressions into Castilian so that they can be readily understood 
in Latin-American countries. ^ 

The difficulty of translating technical matter into a foreign 
language is ably explained by Mr. Maximilian Aviles, export 
manager of the American Sawmill Machinery Company, in a 
brochure entitled "Translating as a Factor in Export Trade." 
"Irrespective of the nature of the matter to be translated," says 
Mr. Aviles, "whether it be mechanical, legal, literary or simply 
commercial correspondence, the purpose of a translation is (1) 
fully and clearly convey the ideas expressed in the original, 

(2) to find the exact equivalent of words and phrases, and 

(3) to render the whole into idiomatic language as pure and 
spontaneous as the original composition. Any translation that 
fails to meet these requirements is defective. If it conveys an 
opposite idea, an erroneous or different impression, it is obvious 
what the consequences will be. If the proper equivalents in 
current use are not found for technical words, or exact defini- 
tions of the same are not given, the translation will not be under- 
stood by the reader or will carry no force, And, assuming that 



CORRESPONDENCE IN EXPORT TRADE 67 

these two requirements have been faithfully complied with, if 
the third should be ignored and the translation be made in a style 
entirely foreign to the character of the language, it will then be 
ineffective, perhaps ridiculous; sentences and paragraphs will 
suggest the ludicrous instead of explaining or convincing." 

Useful Suggestions in 
Foreign Correspondence 

The export manager should always be given a copy of all com- 
munications having to do with export trade. If it is the system 
of the firm to have all original letters go direct to the executive's 
office the export manager should be supplied with a memorandum 
of the contents. 

Sometimes mail bags are lost in shipwrecks or other unavoid- 
able disasters, and important letters never reach their destination. 
In order to avoid loss, copies of the original letters should follow 
on the next steamer. By following this plan many American 
firms saved themselves and overseas customers considerable trou- 
ble during the height of the German submarine attacks in the 
Great War. 

The envelope in which a letter arrives from a foreign country 
should not be thrown away until the location of the city from 
whence it came is fully ascertained. This is necessary because 
there are so many cities in different countries of the same name, 
and mistakes are likely to occur. The writer seldom specifies 
the country from which the letter originated. 

American consuls often complain that American business men 
fail to place proper postage on outgoing mail. This not only 
causes delay but also expense to foreign customers whose heavy 
mail from this country may make the bill for underpaid postage 
quite large at the end of the month. The Official Postal Guide, 
which contains all necessary information regarding postal rates 
to foreign countries, should be in the library of every American 
exporter. 

To insure prompt and safe transmission to destination of arti- 
cles addressed to foreign countries, senders should (1) make the 
address legible and complete, giving the name of the country, 
that of the town or post office, and in cases of cities or towns 
the street and house number should be indicated. (2) Flimsy 
paper for envelopes should be avoided as they are liable to be 



68 EXPORTING TO THE WORLD 

torn or destroyed in the long transits. (3) The use of sealing 
wax for the covers should be avoided, as letters so sealed often 
adhere to each other, and the addresses of some of the articles 
are destroyed by the tearing of the covers in the attempt to 
separate the articles. 

Selection of Stationery 
for Export Correspondence 

American business firms are known the world over for the 
quality of their stationery. Nothing impresses a foreign cus- 
tomer more than the exercise of good taste in the selection of 
stationery, and in the simple and dignified style in which it is 
printed. The use of glaring letterheads may prove offensive to 
the foreign eye. The same letterhead used in domestic corre- 
spondence with a line indicating its origin in the export depart- 
ment when corresponding with foreign customers has found 
much favor with many American exporters. 

Export Department Should 
Have Good Mailing List 

Every export department should have an up-to-the-minute 
mailing list of foreign prospects. A world trade directory pub- 
lished in London is in general use in this country. The United 
States Department of Commerce has from time to time printed 
directories listing merchants and importers of other countries, 
but these directories have not been kept up to date, and have 
decreased in value. In many countries reliable concerns have 
undertaken the task of compiling directories covering the busi- 
ness of the entire country. The names of these concerns may 
be obtained from the consuls representing foreign countries in 
the United States. The telephone directories issued in many 
cities may, also, prove of value if renewed regularly. Another 
source of information that has been entirely overlooked by many 
American manufacturers is the foreign press. In every large 
city of consequence*" there may be found a newspaper that prints 
the news of the entire country, including a commercial survey 
that should prove of value. The advertisements in these news- 
papers often furnish a clue that may lead to business relations 
between advertiser and manufacturer. The successful export 



CORRESPONDENCE IN EXPORT TRADE 69 

manager will keep on file the leading newspapers of the country 
in which his firm is doing business. 

The Parcel Post as Means 
of Developing Foreign Trade 

The parcel post is one of the most valuable mediums through 
which international trade may be developed. An instance of the 
possibilities of developing foreign trade through the parcel post 
is suggested in the statistics for 1912, showing that the Republic 
of Chile alone imported by this method from the outside world 
merchandise valued at $1,982,431, the share from the United 
States being only $49,404. Moreover, by using the parcel post 
foreign merchants are able to effect deliveries much more 
promptly than through the ordinary freight channels. 

The advantages of shipping articles by parcel post lie princi- 
pally in the economy involved. Packages up to eleven pounds in 
weight may be shipped to all the principal countries of the world 
at a nominal charge. The Official Postal Guide should be con- 
sulted for rates, regulations and methods of packing for parcel 
post deliveries. 

While the principal markets of the world can be reached by 
parcel post from this country and further extensions are being 
contemplated, it will be necessary, however, to readjust certain 
parcel post agreements existing between the United States and 
Great Britain before a smooth intercourse through the mails can 
be inaugurated. 

United States at 
a Disadvantage 

The late Maynard D. Howells, Export Manager, Montgomery 
Ward & Co., of Chicago, in a recent parcel post conference at 
Washington, D. C, submitted the following in the form of a 
memorandum which was distributed to the delegates present: 

"A study of the British Postal Guide shows that England lists 
195 countries, colonies, or other overseas nations or groups, as 
open to her exporters for shipment by parcel post. The United 
States lists 86 such countries and groups, so that for purposes of 
comparison the exporter of England can ship his wares by parcel 
post to 109 more countries of the earth than can the American 
exporter. 



70 EXPORTING TO THE WORLD 

"Nor is this all. By reason of her parcel post with the United 1 
States, without any further action, England's exporters can and 
may ship to all of our outlying possessions, that is to say, 
Porto Rico, Canal Zone, Hawaii, Philippine Islands, Alaska, etc., 
while on the other hand our post office department has only 
opened to us such British colonies as have entered into specific 
parcel post treaties with us. If England, by virtue of her treaty 
with us, is entitled to all rights and privileges of dealing with 
our possessions and colonies, why should we not also, by virtue 
cf our parcel post treaty with Great Britain, have access to all 
of her colonies as well? 

"But, to my mind, the most inconsistent and indefensible in- 
equality in the arrangement is the situation by which those 
British colonies which have no parcel post with this country, 
and to which our government has provided no way for our send- 
ing parcels through the mails from America, may yet, on the 
other hand, send their parcels to the United States through the 
English post. Thus a merchant in Nigeria can send his produce, 
if he so wishes, to New York, by parcel post, but a New York 
merchant may not send parcels to Nigeria by parcel post. We 
have a parcel post between this country and England, and Eng- 
land has a parcel post with Nigeria. She, therefore, takes the 
common-sense view that so far as the conveyance of parcels from 
Nigeria to the United States is concerned, she will bring them 
in her own mails without any special treaty ; but we, because we 
have no special treaty with Nigeria, have not even provided a 
reciprocal arrangement whereby the British mails in London will 
accept our parcels from our own mails. We must employ an 
agent in London, pay the postage from America to London and 
British postage from London to Nigeria. ,, 

Thus, it will be seen that there are still some difficulties in 
connection with exporting by parcel post which the government 
alone can remove. However, the facj: that the postal authorities 
are bending every effort to extend the parcel post to different 
countries is encouraging. Arrangements have already been made 
with France and England to facilitate the despatch of packages 
from the United States to colonies belonging to those countries. 



CORRESPONDENCE IN EXPORT TRADE 



71 



Countries with which the 


United States has Parcel Post agree- 






ments 


*Alsace and Lorraine 




* Egypt (including the Sudan) 


*Algeria 






*Erithrea 


^Argentine 






Faroe Islands 


^Australia, including Tasma- 


*France (including Alsace 


nia, Norfolk 


[sland, 


and 


and Lorraine, Algeria and 


Papua (British 


New 


Gui- 


Corsica, and Tunis) 


ana) 






*French Guiana 


Azores 






^"Gibraltar 


Bahamas 






Great Britain and Ireland 


"'Barbados 






*Greece 


*Basutoland 






Guatemala (a) 


Belgium 






^Guadeloupe (including Ma- 


*Benadir 






rie Galante, Deseade, Les 


Bermuda 






Saints, St. Bartholomew, 


Bolivia 






and French portion of St. 


Brazil 






Martins) 


British Guiana 






Haiti 


^British India 






Honduras 


*Carpathos 






Hong-Kong 


Chile 






Iceland (see also Denmark) 


China, including 


Manchuria 


*Italy (including Republic of 


but not the } 


province 


i of 


San Marino, the Italian colo- 


Mongolia 






nies of Benadir and Erithrea ; 


Colombia (a) 






the Italian post offices of 


*Cook Islands 






Bengazi, Libya, and Tripoli- 


^Corsica 






in-Barbary; and the islands 


Costa Rica (a) 






of Carpathos and Rhodes) 


*Crete 






Jamaica (including the Turks, 


*Curacao (including Aruba, 


Caices, and Cayman Isl- 


Bonaire, Saba, 


St. Eusta- 


ands) 


tius, and Dutch 


part of St. 


Japan (including Formosa, 


Martins) 






Karafuto, Japanese Sagha- 


Denmark (includi 


ng the 


Fa- 


lien and Korea) 


roe Islands and 


Iceland) 


Labrador 


Dominican Republic 




Leeward Islands (Antigua 


*Dutch Guiana 






with Barbuda and Redon- 


Ecuador (a) 






da, St. Kitts, Nevis with 



72 EXPORTING TO THE WORLD 

Countries with which the United States has Parcel Post agreements 

(Continued) 

Anguilla, Dominica, Mont- Portugal (including the 
serrat, and the Virgin Isl- Azores and Madeira Isl- 
and (British) ands) 
Liberia *Rhodes 
Luxembourg Salvador (El) 
Madeira Islands ♦Samoa (British) 
♦Martinique *Siam 
♦Mesopotamia ♦Society Islands 
Mexico (a) ♦Swaziland 
♦Netherlands Sweden 

♦Netherlands, East Indies Trinidad (including Tobago) 
Newfoundland *Union of South Africa (Cape, 
New Zealand (including Cook Natal, Orange, and Trans- 
and Fanning Islands) vaal), Swaziland, and Basu- 
Nicaragua toland) 
♦Norfolk Island ♦Uruguay- 
Norway Venezuela 
♦Palestine Windward Islands (Grenada, 
Panama St. Vincent, the Grena- 
♦Papua (British New Guiana) dines, and St. Lucia) 
♦Paraguay 
Peru (a) 

(a) "Specially addressed" parcels are dispatched from San 

Francisco 

♦ Parcels cannot be registered 



Distance a letter has to travel, and time it takvs to reach 
destination, from New York City 



Miles. Days. 

Alexandria, via London 6,150 12 

Amsterdam, via London 3,987 8 

Antwerp, via London 4,000 8 

Athens, via London 5,655 11 

Bahia, Brazil 5,870 14 

Bangkok, Siam via San Francisco 12,900 43 

Bangkok, Sedan via London 13,125 41 

Batavia, Java, via London 12,800 34 

Berlin 4,38'5 8 

Bombay, via London 9,765 22 



CORRESPONDENCE IN EXPORT TRADE 73 

Distance a letter has to travel, and time it takes to reach destina- 
tion, from New York City 
(Continued) 

Miles. Days. 

Bremen 4,235 8 

Buenos Aires 8,045 24 

Calcutta, via London 11,120 24 

Cape Town, via London 11,245 25 

Constantinople, via London 5,810 11 

Florence, via London 4,800 9 

Glasgow 3,370 8 

Greytown, via New Orleans 2,815 7 

Halifax, N. S. (rail) 967 11-3 

Hamburg 4,820 9 

Hamburg, via London 4,340 9 

Havana 1,366 3 

Hongkong, via San Francisco 10,590 27 

Honolulu, via San Francisco 5,645 12 

Liverpool 3,540 7 

London 3,740 7 

Madrid, via London 4,925 9 

Manila, via San Francisco 11,583 31 

Melbourne, via San Francisco 12,265 27 

Mexico City (railroad) 3,750 5 

Panama 2,355 6 

Paris 4,020 8 

Petrograd, via London 5,370 9 

Rio de Janiero 6,204 17 

Rome, via London 5,030 9 

Rotterdam, via London 3,935 8 

San Juan, Porto Rico 1,730 6 

Shanghai, via San Francisco 9,920 25 

Stockholm, via London 4,975 10 

Sydney, via San Francisco 11,570 26 

Valparaiso, via Panama 5,915 22 

Vienna 4,740 9 

Yokohama, via San Francisco 7,345 20 



Chapter VII 

ADVERTISING IN EXPORT TRADE 

Necessity of American advertising in foreign fields — Ad- 
vertising MEDIA AT HOME AND ABROAD — COPY FOR FOREIGN COUN- 
TRIES — The export catalogues — How catalogues should be 

PREPARED AND DISTRIBUTED DUTIES ON CATALOGUES 

Advertising is largely an American idea. Here in this country 
we have developed it, enlarged its sphere, sifted the good from 
the bad and, filially, reduced it to a science which has taken its 
place in American industry as a vital factor in merchandising 
progress. It is true that the printed word is in use in other 
countries for the purposes of advertising, but nowhere on earth 
has so much attention and close study been given to advertising 
as here in the United States. The truth of this statement can 
readily be grasped by an investigation of foreign advertising 
methods. It is the consensus of opinion of American authorities 
on advertising who have returned from foreign countries after 
extended surveys in various countries that, compared to Ameri- 
can methods, the science of publicity abroad is yet in a primitive 
condition. No* concentrated thought has ever been given to it. 
It is unorganized. 

The time has now come when American advertising methods 
must extend to the entire world. We must, in our own original 
way, with certain necessary readjustments, send the message to 
the four corners of the globe. Just as we have intensely devel- 
oped the domestic market by enlisting the power of the printed 
word, we must methodically and intelligently bring our knowledge 
of advertising into play in the foreign field. We must first study 
our markets. We must investigate all channels through which the 
message is to be sent. We must know where those channels lead 
to ; and when they get there, we must know the extent to which 
they are capable of spreading the story. To obtain this data is 
more difficult than at home, and of necessity, therefore, the manu- 

U 



ADVERTISING IN EXPORT TRADE 75 

facturer who desires to advertise in the foreign field must proceed 
with caution. The fact that he is going out of his own territory 
to advertise should not tempt him to throw aside all the points 
he has learned at home. This has been the experience of many 
American merchants who believed that "any kind of advertising 
would do in overseas trade." 

Advertising Media 
in Foreign Trade 

Before laying out an advertising policy for foreign countries 
the manufacturer must first analyze his market. Once satisfied 
that there is a market for his wares in a chosen field, he mu9t 
then proceed with the development of his selling plan. Regard- 
less of the kind of selling plan he decides to adopt there is. going 
to be a certain amount of advertising required. In order to 
properly plan and execute an advertising campaign he must have 
a knowledge of the tools with which he is to work. "What 
mediums can I use to successfully advertise my goods?" he in- 
quires. "Shall I use newspapers? Shall I use magazines? Shall 
I use billboards or motion pictures?" These are only a few of 
the questions that may occur to the merchant. 

For the purpose of analysis the essential media will be listed 
as follows: (a) The trade journals, or, as commonly known, the 
American export journals; (b) the foreign local daily press; 
(c) the foreign local periodical journals; (d) the catalogue; 
(e) the billboards; (f) the motion picture; (g) miscellaneous 
media. 

The Trade Journals 
as Advertising Media 

There are different types of trade journals available. There 
are trade journals that are printed in a foreign language and cir- 
culate exclusively in foreign countries. Then there are those that 
circulate exclusively in this country and claim as their subscribers 
and advertisers shipping men, freight brokers, bankers, import- 
ers and exporters, etc. The oldest type of trade journal, perhaps, 
is the one which circulates in foreign countries and numbers 
among its subscribers importers and merchants engaged in selling 
imported wares from other countries. Its advertising columns are 



76 EXPORTING TO THE WORLD 

usually confined to the business of manufacturers and exporters 
seeking markets in foreign countries or agency connections with 
certain subscribers it is known to reach. This type of export journal 
is usually printed in several different languages. A Spanish, 
French, Portuguese and English edition is ordinarily published. 
It does not circulate in the United States. Its aim is to reach 
the dealers and importers in foreign countries, not the consumers. 
It is published primarily for the trade. Of course, big consuming 
concerns such as mines, construction companies, railroads and 
other large industries who make direct purchase may be num- 
bered among the export trade journal's subscribers. The articles 
in these export trade journals are usually aimed' to keep foreign 
buyers in touch with American industrial and commercial news 
such as advances in processes, improvements, new inventions, and 
novelties. 

The export trade journal may be general or specific in char- 
acter. Some aim to cover the entire field of exports in a general 
way, while others devote their space to certain specialized lines, 
such as engineering, farming, mining, drugs, and leather, etc. 

The circulation of these trade journals is limited. They are 
not sold on the newsstands. No attempt is made to obtain wide 
circulation among a general class of readers in foreign countries. 
It is the chief aim of the publishers to get it into the hands of 
dealers, importers and big consumers who may be interested in 
the advertisements of American manufacturers. Some of these 
publications have paid circulations certified by the American 
Audit Bureau of Circulations, while others are satisfied in having 
their copies distributed carefully to select mailing lists. 

In speaking about the trade journal's activities in Cuba, which 
practically answers the purposes for other countries in Latin- 
America, J. W. Sanger, Trade Commissioner for the Depart- 
ment of Commerce, has this to say in his report on "Advertising 
Methods in Cuba": "The exact position and importance of the 
many American export journals printed in Spanish and circulat- 
ing in the Cuban field are exceedingly difficult to determine. 
With two or three exceptions, they are published primarily for 
the trade and do not attempt to reach the consumer. All the 
leading ones are well edited, and well printed, and contain much 
information for the Cuban importer, merchant, and planter. 
However, with few exceptions, even the best of them have com- 
paratively limited paid circulations, owing, undoubtedly, to the 



ADVERTISING IN EXPORT TRADE 77 

difficulties of obtaining subscriptions in this field. But the buyer 
of advertising space should not too greatly discount their value 
on this score, as he is inclined to do with publications of strictly 
American circulation. Many of them are mailed directly to lists 
of selected names chosen with great care, and it is undoubtedly 
the degree of care governing this selection of names that largely 
determines their value as advertising media. . . . 

"As one of the important means of supporting his campaigns 
in Cuba, the advertiser may well give close attention to the claims 
of at least the leaders among the trade journals. Unquestion- 
ably, if properly circulated, they are a means of assisting him in 
his efforts to reach the market." 

In judging the merits of these export trade journals Mr. 
Sanger suggests the following questions to be put to the pub- 
lishers: "(a) What is your total circulation each issue? (b) 
What is your total circulation in each Spanish-speaking country ? 
(c) How is it secured? (d) What is the type of your readers? 
(e) Is your circulation certified by the Audit Bureau of Circu- 
lations? (f) Are your papers sent out in bulk, or are they 
wrapped, stamped, and individually addressed? (g) Are your 
editorials and news articles merely compiled from doubtful 
sources or written by men who know the country and your type 
of readers? (h) Do you permit 'write-ups' in your reading 
pages ?" 

Foreign Local Daily 
as Advertising Medium 

There are good and bad newspapers all over the world. 
Every large city has its great daily newspapers which exercise 
a wide influence. In some countries one or two newspapers 
dominate the entire field. In other countries there is a great 
rivalry between the newspapers of the larger cities. In no coun- 
try in the world, however, is the daily press so well organized 
and standardized as here in the United States. The manu- 
facturer who desires to advertise in a number of newspapers in 
this country consults his advertising agency. In a minute he 
has before him all the necessary circulation data. He knows 
the character of the market to be reached. Accurate informa- 
tion of the same character from foreign publications as a gen- 
eral rule is unavailable. Advertising rates often vary with 



78 EXPORTING TO THE WORLD 

the temperament of the publisher, and it is highly impossible 
to obtain the real facts concerning circulation upon which so 
much stress is laid by skillful American advertising experts. 

With the extension of American business practices in the 
foreign field, however, the matter of obtaining information 
regarding the foreign daily press is becoming less serious. 
The big American advertising agencies, conscious of the 
necessity of consumer advertising in foreign fields, are rapidly 
taking the proper steps to carefully analyze the foreign press 
in all its phases. It is a question of time only when ©xact 
circulation figures of every important newspaper in the world 
will be available. Also, such information as to the character of 
its readers, methods of distribution, and the character of 
market it covers will be at the disposal of American adver- 
tisers. 

The use of foreign newspapers is essential in the development 
of the market. Consumer advertising is a necessity. It is not 
enough to interest foreign buyers in American-made products 
through the trade journals. Another step must be taken. Ameri- 
can merchants must help dealers move the goods off the counters. 
This can be done — as it is done in America — by the judicious 
use of the newspapers. The author has no faith in the statement 
that the world lacks good newspapers which may be used for 
advertising American goods. The world is full of good media. 
If there is a country without its big daily newspaper an investi- 
gation will show that that country is not sufficiently developed to 
warrant the interest of an American merchant. Where there are 
big markets one will generally find big newspapers 

The Foreign Local 
Periodical Journals 

Foreign local and periodical journals among which may be 
numbered trade and class publications are not as numerous in 
foreign countries as in the United States. Even those that 
have gained a commanding influence and a wide circulation 
cannot compare with our own well known popular magazines. 
They are not as skillfully made up as in this country. The 
careful editing and printing technique that is put into an 
American publication is sadly missing in a foreign journal. 
There are some periodicals, however, that rank very high in 



ADVERTISING IN EXPORT TRADE 79 

their own fields, and deserve serious attention by American 
advertisers. Although their true circulations are obscure there 
is no question that some of these publications are widely read. 
There is a journal published in Spain whose circulation not 
only spreads throughout that country but in every Spanish- 
speaking country in the world. Other countries in Europe as 
well as the English-speaking colonies of the world boast of 
trade and class papers. The Germans, French, Belgians, 
Dutch, Danish and other peoples engaged in foreign trade, 
also, have their trade publications of varying character and 
standards. 

Miscellaneous Media 
for Export Advertising 

The American manufacturer must be on his guard against 
advertising schemes of one kind or another that aim to sep- 
arate his hard-earned gold from his cash drawer. The brisk- 
ness in export trade at the present time has tempted many of 
these schemers to lay out plans of a questionable advertising 
value for the unwary merchant. The same good judgment as 
applied in the local field should serve as the formula to keep 
away from these designing individuals who claim to have 
found the "royal road to success" in foreign advertising. 

"Special Export Editions" are often launched by regularly 
established newspapers and periodicals. The rate for adver- 
tising in these editions is usually higher than in the ordinary 
issues, due to the fact that free write-ups are included. The 
advantages of "special export editions" or any kind of "special 
editions" are questionable. The shrewdest American adver- 
tisers who have tried all sorts of publicity schemes are more 
and more beginning to look upon these special editions as 
wasted effort from an advertising point of view. The fact 
that some of our more conservative newspapers, and weekly 
and monthly journals have within recent years frowned upon 
this method of increasing their advertising receipts, preferring 
to rely on their regular business for their success, justifies the 
statement that the special edition is fast losing its popularity. 
The fact that it is a "one time" proposition is, alone, a suffi- 
cient indictment against it. 



80 EXPORTING TO THE WORLD 

Trade Directory 

as Advertising Medium 

Trade directories in many forms are quite common. Those 
published and circulated in the United States are supposed to 
contain classified lists of business men engaged in foreign 
trade. Others are circulated in foreign countries and contain 
the names of manufacturers. These directories are aimed to 
direct the foreign buyer to the proper sources for special lines 
in which he may be interested. Some of these directories) 
usually find their way into the offices of American consuls 
abroad, where they may be consulted by foreign merchants. 
There is no question that these directories are capable of 
doing some good work for American manufacturers. They 
are often consulted. Before subscribing to this form of adver- 
tising, however, the manufacturer should find out how and 
where these directories are to be distributed, and whether the 
price he must pay is consistent with the service rendered. 
Of this, the manufacturer, alone, is the judge. 

Export trade journals circulated in this country exclusively 
and containing editorial matter of interest to manufacturers 
and exporters and importers alike, are growing in number. 
In New York city alone there are at least half a dozen of these 
publications coming under this classification. Articles cover- 
ing specific problems in foreign trade add considerable value 
to these journals. They aim to circulate among American 
merchants vitally interested in some phase of foreign commerce. 
These export trade journals should not be confused with 
house organs which are published by certain American export 
commission houses, and conducted in connection with their 
regular merchandising business. 

Outdoor Advertising 
in Foreign Countries 

Street-car and outdoor advertising is not confined solely to 
the United States. This form of advertising is in evidence 
in nearly all the important countries of the world. In some 
countries street-car and outdoor advertising is confined purely 
to the large cities. Electric signs, also, will be seen in com- 
mercial centers. These three forms of advertising, however, 



ADVERTISING IN EXPORT TRADE 81 

are not as well organized and developed as in the United 
States. There is plenty of room for improvement. 

The world is a virgin field for American motion pictures. 
The American-made "movie" has practically crowded foreign 
competitors off the field. The foreign world is very much 
interested in American methods, and there is no better way 
to visualize American industry and progress than through the 
motion picture. American manufacturers who have "filmed" 
their plants for domestic exhibition should turn their eyes 
toward foreign countries where their pictures will be enthusi- 
astically received. The titles, of course, should be translated 
into the language of the country where they are to be exhib- 
ited. The most successful motion picture for foreign purposes 
will be that one which visualizes the entire process of manu- 
facture of an article in story form. In other words, the film 
should be made under the direction of a skillful director who 
understands the art of telling a story in a motion picture. 

Copy for Advertising 
in Foreign Countries 

Advertising copy as used in the United States will not "go" 
in foreign countries as a general rule. The foreign newspaper 
reader is accustomed to conservative methods in advertising. 
The bombastic page advertisement often seen in the Ameri- 
can press needs considerable deleting and rewriting before 
it should be permitted to leave this country. It must be 
understood that, in preparing copy for the world, the ad- 
vertising writer must take into consideration different lan- 
guages, customs, habits, idiosyncracies, peculiarities and what 
not in the countries where his copy is to be placed. Advertis- 
ing copy that may be satisfactory in Australia may not be 
used in London. Also, copy for the different Latin-American 
countries requires considerable changing. The problems that 
the copy writer has to face are interestingly told by Mr. J. W. 
Sanger, Trade Commissioner for the Department of Com- 
merce, in referring to the Cuban situation. 

"A well known Cuban who has spent many years in both 
the United States and Europe said to me," Mr. Sanger writes : 

'We Cubans do not think constructively in the Anglo-Saxon 
sense, but enjoy enjoying our emotions. We love color and 



82 EXPORTING TO THE WORLD 

life in everything, and we demonstrate it in the bright colors 
of our automobiles and in the spots of pink, terra cotta, and 
blue of our older houses/ His opinion, and it was substan- 
tially supported by many others, has a distinct bearing upon 
the 'copy appeal' necessary in Cuba. Carried to its logical 
conclusion, the evidence of these witnesses and the writer's 
observations both tend to indicate that 'reason why' copy, 
common in the United States, finds little response in Cuba 
except in the advertising of articles of a distinctly technical 
nature." 

Often social conditions and climate determine the character 
of copy for foreign countries. Again quoting Mr. Sanger: 
"In Cuba the writer observed one advertisement of an Ameri- 
can cleaning fluid or wax, in which the illustration pictured 
the man of the house and his wife deeply interested in the 
work of cleaning their car. In Cuba all cleaning, without 
exception, is done by the chauffeur or in a public garage. 
Even the cheapest automobiles are driven by chauffeurs, and 
the owner exerts no appreciable influence as to the kind of 
cleaning fluid or polishing wax used. He is the opposite to 
the American who has a turn for mechanics and who does not 
object even to cleaning his own car at times. 

"Another advertisement of a well-known American proprie- 
tary medicine widely advertised as a preventive of colds 
showed the danger of cold weather and its attendant sickness 
by picturing two children in a snowstorm. Cuba is in the 
tropics and snow has never fallen there." 

These quotations from Mr. Sanger serve as typical illustra- 
tions of problems that may be encountered in other sections 
of the globe. It is one thing to prepare copy that should 
stimulate interest and inquiries in one's articles, but it is an- 
other thing to prepare it in such a way as to take into con- 
sideration a hundred and one peculiarities that may be found 
to exist in one form or other in strange lands. 

Simplicity Essential 
in Advertising Copy 

Simplicity should be the keynote of advertising copy for 
foreign purposes. A formal and dignified style yet interest- 
ing enough to inspire the reader's interest should be the basic 



ADVERTISING IN EXPORT TRADE 83 

mark set by the advertising writer. The development of this 
rule will be guided by experience in the different markets. 
There are no hard and fast rules in foreign advertising. 
Knowledge of the fundamentals is essential. Once acquiring 
this knowledge, success in preparing copy that will bring 
results will largely be determined by the seriousness with 
which the advertiser studies his foreign problem as well as in 
the selection of reliable advertising mediums. 

The power of advertising lies in its cumulative value. It 
is not the advertisement that appears tomorrow alone that 
will bring results to the man who pays the space bill ; it is the 
copy that is keyed to a certain schedule planned by experts 
that will justify proper expenditures in the final reckoning. 
It is needless to emphasize the necessity of carefully planned 
advertising campaigns. They are absolutely essential in the 
United States. It is a policy that must be adopted in foreign 
countries. 

Export Catalogues 
in Foreign Trade 

The export catalogue serves as the medium of direct adver- 
tising. The export catalogue goes right into the office or 
home of the prospective purchaser. The same degree of care 
as exercised in the regular correspondence with foreign cus- 
tomers should be brought into play in the preparation of the 
export catalogue. The catalogue should tell the whole story 
of the manufacturer's product. It should leave nothing for 
guesswork. It should be well illustrated. Every article 
should be carefully described. In preparing these descrip- 
tions and illustrations the manufacturer should take it for 
granted that the other fellow knows nothing about his mer- 
chandise. The catalogue should be written in the language 
of the customer for whom it is intended. There has been 
considerable complaint on this score from various foreign 
sources. An American consul in Italy complains that Ameri- 
can manufacturers have not broken themselves from the habit 
cf communicating with Italian merchants in English, and of 
sending catalogues in a language they not only do not under- 
stand, but lack the facilities for having it made understand- 
able. A consul in Brazil insists that Portuguese is the Ian- 



84 EXPORTING TO THE WORLD 

guage of Brazil and that, therefore, catalogues should be in 
the Portuguese and not the Spanish tongue. 

The mobilization of domestic catalogues written in English 
for foreign service in order to economize is false economy. 
While there are many foreign customers who may be able to 
translate and read the text of American catalogues with a 
great deal of interest, nevertheless there are countless others 
who will appreciate a catalogue printed in a language they 
understand. In reaching out for foreign business through 
the medium of the printed word it is generally agreed that the 
prospect should be addressed in his own tongue. The sooner 
this policy is adopted by the new beginner the better it will 
be for his business. 

In making up foreign catalogues the same care exercised 
in translations in correspondence should be taken in preparing 
the text. Translations must be perfect. They must be under- 
stood wherever they are sent. Translations should not be left 
to individuals whose bid has been the lowest, but to those 
who can prove their efficiency. The language of the country 
where the catalogue is to circulate should be thoroughly 
understood. The English language should not be misunder- 
stood. The perfect translator is he who understands both 
languages. 

A cheap looking catalogue should be avoided. The cata- 
logue is the show-window of the manufacturer. A neat dis- 
play attracts the customer. A "shabby" appearance detracts. 
Care should be exercised against using inferior grades of 
paper. This precaution is necessary in order to avoid poor 
reproductions of engravings. The clearest possible pictures 
are necessary for an export catalogue, and the selection of a 
satisfactory grade of paper will assure this result. 

Full Information Is 
Necessary in Catalogue 

In the absence of the personal representative tne export 
catalogue is the manufacturer's "right hand man" in the field. 
Through the medium of the catalogue the manufacturer is 
endeavoring to create interest in his merchandise. He would 
like to draw an inquiry which later may turn into a huge 
order. The success with which he will achieve these aims 



ADVERTISING IN EXPORT TRADE 85 

rests with the skill which he has employed in the preparation 
of his mouthpiece. Has he made a proper introduction? Has 
he made a careful presentation of his case? Has he logically 
driven home his points as to quality, utility, or price? Has 
he told his story without exaggeration? An affirmative 
answer to these questions serves as some of the fundamentals 
required in the making of a good catalogue. 

Half-tone Cuts Should 
Not Exaggerate Article 

It is an old complaint that some of our half tone cuts ap- 
pearing in American export catalogues look so attractive that 
the purchaser of an article which has been so temptingly 
visualized is often doomed to a keen disappointment. The 
"real thing" is so much different from the picture. It is not 
in the least difficult for a skillful artist to picture a gun or 
watch of nominal value so that it will look like an expensive 
article. While the artist's skill is to be commended, neverthe- 
less, special care should be taken to accurately describe the 
article in order to avoid any misunderstanding on its sale. It 
is a much better policy to be absolutely honest in a careful 
description at the outset than to constantly endeavor to ap- 
pease the wrath of some disappointed buyer who may feel 
that he has been imposed upon. When the foreign purchaser 
buys an article from a catalogue he expects it to be exactly 
as described. He places a certain amount of confidence in the 
catalogue. How much that confidence is deserved depends 
on the good faith the manufacturer exhibits in the preparation 
of his literature. He must remember that the logical policy 
is that policy that will insure a permanent business. A per- 
manent business abroad depends on the confidence he can 
inspire from new customers. Surely he cannot build up a 
permanent trade by questionable methods. 

Hozv Prices Are to Be 
Quoted in Catalogues 

There are instances where American manufacturers have 
sent catalogues without prices accompanying the articles de- 
scribed therein. An American consul relates an instance 



86 EXPORTING TO THE WORLD 

where a large American implement manufacturer lost a valu- 
able order in an Australian field because the buyer was un- 
able to obtain any information about the prices of some articles 
he very much desired, and which the manufacturer had for sale. 
Catalogues should be accompanied with prices. Catalogues meant 
for distribution among the consumer population should not 
contain prices unless the suggestion or advice of agents in the 
territory in which they are to be given is first sought. But 
catalogues that are likely to fall into the hands of importers, 
jobbers, wholesalers and retailers alike should not contain 
list prices unless accompanied with liberal discount terms in 
order that the wholesalers and others engaged in the resale 
of goods may be protected against the betrayal of their profits. 
Further protection may be gained by inserting two separate 
lists of discount sheets in the catalogues, one to retailers and 
the other to those who do business with retailers. 

The export catalague should function something like the 
export traveling salesman. It should be capable of giving 
complete information regarding the manufacturer's wares. 
Moreover, it should enable the customer to accurately esti- 
mate what the goods are likely to cost him. Unless the cata- 
logue is accompanied with full explanations on this score the 
customer may lose all interest and seek some other firm that 
extends better facilities. 

Information Necessary 
in Export Catalogue 

The export catalogue should be able to answer the following 
questions : 

Is shipment to be f. o. b. factory or f. o. b. port of shipment? 

Is it to be f. o. b. steamer? 

Are there any additional expenses such as packing, cartage, 
etc.? 

If packing charges are not included what are approximate 
costs of other packing peculiar to requirements of goods? 

This information is necessary as it enables the customer to 
make an approximate estimate of the cost of the goods when 
landed at the port of destination. 

Nor does this requirement end here. All weights and dimen- 



ADVERTISING IN EXPORT TRADE 87 

sions of each unit of the shipment should be given in the 
metric system as well as in the English system. The gross 
and net weight of the goods as packed and prepared for ship- 
ment, with the metric equivalents included, should not be 
overlooked, as it enables the buyer to estimate freight costs 
and the approximate ultimate cost of the goods when he re- 
ceives them. Full description of how the goods are to be 
packed should be given, as well as a statement of the costs of 
other methods of packing that the customer may require. It 
must be remembered that the weight of the packing may 
prove to be a very important factor in determining the cost of 
merchandise to the importer. It is advisable to invite sugges- 
tions from the importer as to the best means of packing goods 
for shipment to his territory. 

Quoting Prices in 
American Currency 

The foreign purchaser probably knows more about inter- 
national currency than the average American manufacturer. 
With very little effort he can find the equivalent of an Ameri- 
can dollar in a foreign currency. Therefore, in quoting in 
catalogues and price lists, it is advisable to name the prices 
in American currency. If the manufacturer wishes to include 
the equivalent in other coins, however, he should confine him- 
self only to the most important currencies, such as the pound 
sterling, francs and marks, which are well known all over the 
world. 

Terms of Payment for 
Merchandise Bought 

There has been considerable criticism on the part of for- 
eigners to the effect that American manufacturers demand 
cash in advance for goods purchased. This is true only in 
cases where the customer is a total stranger, and where his 
credit rating is unknown. In making quotations in the cata- 
logue terms of payment should be included. The best au- 
thorities on export trade agree that these terms should be either 
strictly cash or some form of guarantee before goods are 
shipped. The buyer may find relief from this apparently 



88 EXPORTING TO THE WORLD 

difficult method of doing business, however, by placing his 
orders through commission houses, or sending a draft along 
with his list of requested articles. Also, his local bankers 
may be requested to open a credit with American bankers. 
After mutual confidences have been established, however, it will 
not be difficult for a foreign purchaser to buy merchandise in the 
United States on the most agreeable terms possible. 

How Catalogues Should 
Be Distributed to Trade 

Catalogues are expensive to produce. They serve as a 
direct medium through which a foreign business may be de- 
veloped by an American manufacturer. How extensive this 
business may become depends largely on the intelligent dis- 
tribution of this valuable literature. Catalogues in the Por- 
tuguese language should not be sent to Argentina or Chile, 
where Spanish is spoken. Neither should catalogues aimed 
to reach wholesalers fall into the hands of retailers or con- 
sumers. The best available lists of retailers, wholesalers, or 
others engaged in reselling should be consulted. Reliable 
names may be obtained from well known trade directories or 
from commercial organizations. Export trade journals of the 
better class are able to furnish competent lists. It is possible 
that foreign banking institutions may be able to submit good 
lists of names. The American consuls in different parts of 
the world as well as commercial attaches often ask for cata- 
logues of American firms to distribute among interested im- 
porters. 

Import Duties on 
American Catalogues 



'.s 



Catalogues cannot be sent to foreign countries indiscrim- 
inately. The duty on such material in various countries must 
be investigated before a plan of distribution is launched. When it 
is known that in some countries the duty on catalogues is 
greater than that on the accompanying merchandise the neces- 
sity of taking due precaution in this matter will be recognized. 
In order to protect foreign customers from the payment of 



ADVERTISING IN EXPORT TRADE 89 

duty on this sort of material, catalogues should never be in- 
cluded with the shipment of goods. If advertising matter, 
such as catalogues, posters, etc., is to be sent, it should be 
packed in a separate case, and only on the instructions of the 
customer. In nearly every country in the world the manu- 
facturer will discover certain duty obligations on export cata- 
logues. Before planning their distribution he should consult 
the consul of the country in which he desires to distribute his 
literature for accurate information. 



Chapter VIII 
EXPORT HOUSES 

The export merchant— The export commission house — How 

EXPORT HOUSES OPERATE IN FOREIGN FIELDS ADVANTAGES AND 

DISADVANTAGES OF EXPORT HOUSES FUTURE OF EXPORT COMMIS- 
SION HOUSES 

American export houses commonly known as the export 
commission houses or the export merchants are the pioneers 
of American foreign trade. They have blazed the trail into 
strange lands. They have introduced articles made by Amer- 
ican workmen among peoples of a different language and 
customs other than our own. They are the original propa- 
gandists of American skill. Wherever there have been found 
people who commanded a certain purchasing power or who 
had valuable articles to barter there would be found the pio- 
neer American trader ready to make a bargain. The Ameri- 
can export houses are the "middlemen" in our export trade. 
A half century ago they controlled, perhaps, almost the entire 
volume of our business with foreign countries. As American 
manufacturers are beginning to recognize the necessity of 
extending their direct sales activities to foreign countries, 
however, these commission houses are gradually losing what 
was once a firm hold of the export trade. But it never will 
be entirely lost. There will always be middlemen in foreign 
trade just as there are middlemen in domestic business. The 
export house in foreign commerce is a valuable institution. 
It knows the business. It has marshaled together a force of 
skillful and competent men who thoroughly understand every 
branch of business abroad. It understands the routine in- 
volved in the shipment of goods by sea, that is not encoun- 
tered at home. It knows the customs and habits of foreign 
peoples. It knows the laws and regulations and other details 
peculiar to transacting business with customers in a foreign 

90 



EXPORT HOUSES 91 

country. In other words, the export house is a specialist in 
its line of business, and this is an age of specialists. 

The Export Merchant and the 
Export Commission House 

As our foreign commerce began to gradually grow the func- 
tions of these export houses engaged in foreign trade became 
more complicated. Originally, there was a sharp distinction 
between the export commission house and the export mer- 
chant. The export merchant confined his activities to purely 
buying and selling on his own account. The export commis- 
sion house confined its activities to the execution of orders in 
the United States for foreign customers, never buying mer- 
chandise on its own account. 

With the development of our foreign commerce, however, 
and the extension of our means of communication and trans- 
portation to even the most out-of-the-way places of the globe 
the functions of these houses have been constantly increasing, 
and now we find the export merchant not only continuing in 
his original policy but assuming some of the functions that 
were once exclusively controlled by the export commission 
bouse, and, on the other hand, we find the export commission 
house in many instances invading the field of activities that 
tradition originally assigned to the export merchant. In fact, 
this confusion of functions has become so pronounced that it 
is now difficult to determine just where the line should be 
drawn between what has been commonly known as an export 
merchant and an export commission house. 

Functions of the 
Export Merchant 

In theory the export merchant purchases just like the domes- 
tic jobber or wholesaler. He buys where he can obtain the 
lowest prices and he sells wherever he can get the best prices 
for his merchandise. He engages in this business on his own 
account. Unlike the export commission house, the export 
merchant need not wait until some foreign customer sends in 
an order or indent for American goods. If he feels that he can 
buy goods at an advantage today or book freight space for 



92 EXPORTING TO THE WORLD 

such and such a date he will do it without the necessity of 
receiving instructions from anyone. He is his own master. 

Operations of an 
Export Merchant 

The export merchant is usually to be found at some great 
seaport like New York or San Francisco. From these points 
he directs operations that may cover the greater part of the 
world or only a portion. When the field is broad the merchant 
divides his business into departments so that each department 
may individually conduct the business of a certain territory. 
For instance, there may be a Far East department, or a South 
African department, or a Latin-American department. It is 
necessary to divide the business into these various depart- 
ments because of the special requirements and peculiarities 
of each geographical group. Only a force of employes that 
has specialized in the handling of the business in each of these 
groups for a long period of time can efficiently handle the 
great amount of detail work involved. 

Instances are, indeed, rare where an export merchant en- 
deavors to cover the world in the development of his business. 
It does not pay. Such an attempt involves the thin spread- 
ing of his energies over a great amount of territory, and much 
uncertainty, whereas, if he would confine himself to one geo- 
graphical division where conditions are uniform, the efficiency 
of his staff would not only be increased but undivided atten- 
tion to the development of that particular market would be 
assured. There are, of course, certain large exporters of 
staple articles that must of necessity confine themselves to no 
individual zone. Among these may be included exporters of 
wheat or cotton. 

How Export Merchant 
Transa cts B usiness 

When the foreign importer wants to know the cost of an 
article or an assortment of articles for the purpose of quoting 
his local trade he is interested in knowing the approximate 
cost of the merchandise at the port of destination so that he 
may be able to intelligently figure his price therefrom. As the 



EXPORT HOUSES 93 

export merchant receives many of these requests for quota- 
tions by cable he must of necessity detail the cost of the mer- 
chandise, the marine insurance and the freight charges. This 
is the modern c. i. f. term which involves the merchant in the 
obligation to furnish the goods, provide the transportation to 
port of destination, and to insure the shipment against ocean 
risks. This serves as a great advantage to the importer who 
is in a position to precisely know what his goods will cost 
when they arrive so that he can make his own price to the 
customer. Furthermore, the importer is relieved of the trou- 
ble of booking freight space as well as the risk involved in 
the changing freight rates. The export merchant, being on 
the ground, is in a better position to exercise his discretion in 
the booking of freight than the importer. He is necessarily in 
close touch with shipping conditions. The merchant, of 
course, is not confined to quoting c. i. f. terms exclusively. 
The nature of the relations existing between merchant and 
importer may determine the method of quotation. In a later 
chapter these c. i. f. terms will be more fully explained. 

Export Merchant's Branches 
at Home and Abroad 

The bona fide export merchants of today have branch offices 
in every section where their business has been developed. 
This means that they may have branches at home as well as 
abroad. Owing to great distances and the necessity of having 
personal attention at the principal ports of shipment in the 
United States the export merchant whose volume of business 
justifies it has now a branch office in each of the principal sea- 
ports of the United States through which the great volume 
of the American export trade passes to foreign countries. 

A well known export merchant has a string of branches 
along the west coast of South America. These branches dom- 
inate the territory in which they are situated. The organiza- 
tion of the foreign field is even extended to sub-branches 
which are responsible to the main branch of the country, and 
in turn the main branch is responsible to the head office in 
the United States. The branch manager must be not only a 
competent man, but a man with a vision. He must develop 
the business as well as keep the home office in touch with 



91 EXPORTING TO THE WORLD 

changing local conditions. He must know the financial 
strength of those with whom he is doing business. He must 
know at all times what his competitors are doing and con- 
stantly keep the home office informed by cable or by mail as 
to the actual situation. The advantage of a branch office lies, 
of course, in the fact that it is on the ground to know first 
hand what the conditions and possibilities are, as well as to 
contribute the element of the personal equation in the market, 
which is a powerful factor nowadays in developing an export 
business. 

Foreign Agency for 
Export Merchant 

The nearest approach to a branch office for an export mer- 
chant is a foreign agency which is supposed to render prac- 
tically the same services as a foreign branch office. The 
foreign agent is expected to do all in his power to develop 
business for the export merchant. The foreign agent may 
have the exclusive representation of more than one line, pro- 
vided, of course, there is no conflict of interests. An agent 
must not represent two different makes of a typewriter or an 
automobile. The kind of agent the American export merchant 
is always looking for is he who takes the initiative in develop- 
ing business, such as sending out solicitors to interview the 
trade, and who constantly keeps his principal informed of 
market conditions or other developments that may be of im- 
portance to the home office. The diligence with which the 
agent functions determines his continued relations with the 
export merchant. 

How Export Merchant 
Works With Manufacturer 

Individual cases, of course, determine the relations between 
export merchant and manufacturer in the exploiting of the 
latter's goods in foreign fields. Authorities on the subject 
uf relations between these principals agree that the contract 
that has found most favor is that which provides that the 
export merchant shall guarantee to purchase a stated quantity 
of the manufacturer's article in return for the exclusive agency 



EXPORT HOUSES 95 

in the country where the merchant is operating. Some of the 
most famous American trademarked articles have found their 
way into foreign countries by this method. A certain make 
of typewriter has been introduced into a foreign market by a 
somewhat similar plan of action. In this sort of an agreement 
a clause may also be included providing that the manufac- 
turer and merchant equally share the expenses involved 
in sending a traveling salesman through the territory on 
soliciting mission. Whatever sort of an agreement is 
reached, it must be remembered that the export merchant 
performs a useful service, and is competent to intelligently 
develop sales for American goods in foreign markets. The 
export merchant by virtue of the strength of his organization 
may be in a position to handle the lines of several manufac- 
turers, which is an economic saving in itself. On the other 
hand, the manufacturer may find it more profitable to do busi- 
ness direct. This he can do, but he must have the export 
machinery to do it with. Either method has its advantages 
and disadvantages. The decision to choose one or the other 
rests with the manufacturer. His course is determined by his 
own individual problems. 

Functions of the 

Export Commission House 

Theoretically, the export commission house merely executes 
orders in the United States for a foreign importer, receiving 
its income from commissions it charges to these clients for 
services rendered. This is the basic principle upon which the 
commission house originated. With the growth of our export 
trade, however, the export commission house ceased to con- 
fine its functions to executing orders for foreign buyers and 
assumed additional burdens, such as buying and selling in 
special instances and acting as agents for American manufac- 
turers in foreign countries. Of the 2,000 or over export 
houses in the principal ports of the United States the majority 
of them may be properly called export commission houses. 

The export commission house begins operations by inducing 
foreign buyers to entrust their purchases in the United States 
with the firm. In order to gain this confidence the commis- 
sion house must prove that it has a thorough knowledge of 



96 EXPORTING TO THE WORLD 

the sources of supply in the American market as well as an 
experience in the purchase of merchandise. Moreover, the 
commission house must be thoroughly equipped to handle all 
the details peculiar to the export trade. In other words, it 
must be an export house in every sense of the word. 

How Export Commission 
House Executes Orders 

An order comes from an importer in South Africa for an 
assortment of goods. In the relations existing between the 
export commission house and the importer it is already under- 
stood that a certain fixed commission will be due the former 
for its services in executing the order and in obtaining the 
lowest prices possible. In this case the commission house will 
usually ship the goods to its client on an f. o. b. basis, i e., free 
on board ship. Before this development in the transaction is 
reached, however, the export commission house will have sent 
its buyer out to find the goods. It is possible that the im- 
porter has specified the manufacturers from whom the goods 
are to be bought. The buyer has nothing to do then but to 
go to these manufacturers and obtain them. On the other 
hand, the importer may have left the selection of other items 
on the order entirely to the judgment of the commission 
house. In this case the commission house buyer goes to the 
manufacturers who make these goods. He may get in touch 
with them by looking up their names in the trade directories, 
or advertisements in the export trade journals. The goods 
are then collected together, shipped on one bill of lading and 
after the importer makes his payment the transaction is com- 
plete. The services rendered have been the buying of goods 
in the American market, the taking care of the details in con- 
nection with the shipment, the booking of freight space, and 
the obtaining of the marine insurance if the importer requests 
it. Finally the commission house draws against the importer 
for the cost of the goods and other charges, as well as the 
commission for services rendered. In this transaction the 
commission house is acting purely as an agent. We shall now 
see how it may act as a principal. 

The order comes from the same importer in South Africa. 
Instead of asking the commission house to makes purchases 



EXPORT HOUSES 97 

from certain manufacturers or in the open market the im- 
porter this time requests a price for a certain list of goods, 
including the cost, insurance, freight and the commission or 
profit that the commission house is likely to receive. In this 
case the export commission house is forced to quote on a 
c. i. f. basis. Also, it is in competition with other commission 
houses for the same order. Realizing that it must quote as 
low as possible in order to obtain the business, in many cases 
the commission house will eliminate the margin of profit in 
its price to the importer, and depend for its profit on its 
ability to buy from the manufacturer at a lower price than 
that quoted to the customer. Or, if it understands the freight 
situation, it may obtain space at a lower rate than that quoted 
in the original figure. 

Thus it will be seen that the export commission house dif- 
fers from the export merchant in that it acts merely as an 
agent for an importer in a foreign country executing all orders 
that the latter may issue. It approaches the functions of the 
export merchant only when it engages in the purchase and 
sale of merchandise on a c. i. f. basis, as explained in the 
previous paragraph. On the other hand, the export merchant 
buys on his own responsibility and sells where he can obtain 
the best price for his merchandise. No commissions are in- 
volved in his transactions. He fixes his own margin of profit, 
and that is included in the price to the customer. 

Sometimes the functions of the manufacturer's agent are 
confused with those of an export commission house. The 
manufacturer's agent acts purely in behalf of the principal, as 
the name implies. Orders coming to the agent must go to 
the manufacturer he represents, while the commission house 
is not bound to patronize any particular manufacturer unless 
it is instructed to do so by the foreign client. 

Organisation of the 
Export Commission House 

The export commission house may be found in any large 
American seaport. From this point a staff consisting of an 
executive, buyers, correspondents, shipping clerks, bill or 
auditing clerks, invoice clerks, and bookkeepers direct the 
business that may be extended to all sections of the world. 



98 EXPORTING TO THE WORLD 

The number of employes and executives on the ^payroll v i& 
determined by the strength of the house's finances as well as 
the volume of business it conducts. 

In the large organizations, where several countries are in- 
volved, departments are created to handle the business of each 
individual country. At the head of each department there 
may be a buyer whose functions are to understand the needs 
of the foreign country for which he is to make purchases, as 
well as to keep in touch with foreign buyers by frequent visits 
to their territory, or by correspondence. When buyers arrive 
in this country to look over the market it is the duty of the 
buyer for the commission house to make their acquaintance. 
In a business where technical knowledge is required the com- 
mission house may have on its payroll an expert buyer who 
has a thorough technical knowledge of the articles to be pur- 
chased. It often happens that a commission house leaves the 
buying to the heads of the departments, whose knowledge of 
the sources of supply may be adequate for intelligent work. 

The buyer's aim is to obtain the lowest quotation, and to 
make as shrewd a bargain as possible. The intelligent con- 
duct of his assignment depends on his knowledge of the 
sources of supply and the prices offered by competing manu- 
facturers. Agents of the latter frequently make the rounds of 
the commission houses soliciting business. Buyers as well as 
heads of departments are thus able to keep in close touch with 
competing prices as well as new articles put on the market 
for sale. 

Foreign Branch Office of 
Export Commission House 

When the volume of business justifies it the export commis- 
sion house will establish branches in certain commercial cen- 
ters abroad. They are not to be found everywhere, however. 
Only those markets that have been developed sufficiently to 
justify special effort are selected as suitable places for branch 
offices. Usually these branches are in charge of an executive 
trained in the home office. Cases are known where natives are 
in charge. Whoever the branch manager may be, it is obvious that 
he must be given a free rein in the conduct of his duties. He 
is the man in the field and knows more about the conditions 



EXPORT HOUSES 99 

and requirements than his superiors at home. His employers 
have selected him because of the confidence in his judgment. 
Therefore, when he assumes his duties of foreign branch man- 
ager they must rely on his judgment. It would seem that the suc- 
cessful conduct of a foreign branch office should be left en- 
tirely to the foreign branch manager, yet the powers-that-be 
at home often endeavor to dictate certain impossible activities 
without even consulting the man on the ground. In order to 
obtain the best that is possible out of a foreign branch office 
the export commission executive at home should be satisfied 
merely with the supervision of the general details of the over- 
seas business, and leave the matter of obtaining results to the 
man upon whom he originally placed his confidence. If he 
fails to "deliver" then he has the power and authority to send 
him home. 

The advantages of a foreign branch office are obvious. In 
the first place it puts the personal touch in the foreign field. 
This is very important. Also, through the branch office the home 
people are constantly kept in touch with changing commercial 
conditions and markets. A better knowledge of the financial 
standing of the customers is obtained. The development of 
the market is expedited. When there are new goods to intro- 
duce the foreign branch office is in a position to do this prop- 
erly and efficiently. 

Foreign agents of the export commission house operate in 
much the same way as agents for the export merchant. They 
usually trade under their own name and may have various 
sorts of arrangements for the representation of American 
lines. 

Merchandise of the 
Export Commission Man 

In theory the export commission house handles all sorts of 
merchandise. Some commission houses, however, specialize 
in certain lines, such as drugs, chemicals, machinery, hard- 
ware, clothing or automobiles. There is no set rule of action. 
Moreover, an export commission house may have an agency 
for an automobile in South America, while in Australia its 
line may be pianos. It often happens that an exclusive agency 
for a certain article does not follow the export commission 



100 EXPORTING TO THE WORLD 

house all over the world. Neither are its lines identically the 
same in every country it reaches. An American export com- 
mission house deals in hardware in one section of the world, 
in cotton piece goods in another, and in agricultural machinery 
in still another. 

The degree of specialization is generally determined by the 
volume of business that the export commission house may be 
able to work up in a certain line in its overseas trade. When 
the commission house reaches that point where it can give 
such specialized attention as the sale of a certain commodity 
may justify it will then be in a position to give more efficient 
service. 

In every market different customs regulations, language, 
conditions, etc., may be encountered by the export commission 
house. If its program is so ambitious as to endeavor to cover 
the entire world it will readily be seen that a large staff com- 
posed of experienced men who understand the various 
methods of handling shipments for individual markets will 
be necessary. Unless the business is of such volume as to 
justify a tremendous organization the export commission 
house will do well to confine itself to certain territories where 
it will not be so difficult for the smaller staff to keep in touch 
with conditions as well to thoroughly master the details 
peculiar to those markets. 

How Commission House 
Develops Its Sales 

In developing business the export commission house may 
employ salesmen who are sent either from the home office or 
from the branches abroad. Or business may be developed 
by correspondence and advertising. Obviously, the first 
method is the best, as has already been indicated in a previous 
chapter. 

In his operations the salesman may carry a large number of 
samples, which he displays at the branch office of the concern. 
Ordinarily he works out from this branch in the country to 
which he has been assigned. Some commission houses, how- 
ever, send their salesmen to different zones. At the end of 
the tour these salesmen return to the home office to make 
their reports. 



EXPORT HOUSES 101 

It has been shown in this chapter how the export commis- 
sion house keeps in close touch with buyers for foreign houses 
who may arrive in this country to make their purchases. The 
names of these buyers may be obtained from the newspapers 
or trade organizations existing in the various seaports. 

Routine of Commission 
House in Handling Order 

The handling of an order in an export commission house is 
something like this: 

The order is for an assortment of stationery. The importer 
may have specified the names of the manufacturers from whom 
the goods are to be purchased. In this case, the commission 
house buyer will have to look up these manufacturers. Or, 
the order may empower the commission house to use its own 
judgment. If such is the case the commission house will 
send out inquiries to the leading manufacturers for the lowest 
possible quotation on the goods. Before the order is given 
serious attention, however, the credit standing of the foreign 
customer is investigated. In old-established commission houses 
the matter of deciding whether or not the importer shall re- 
ceive credit is a simple one, as they know the financial status 
of their customers through long experience, as well as the 
methods of obtaining reliable credit information concerning 
new customers who send their orders to be executed in the 
United States. 

The matter of credit to the customer determined, the buyer 
now receives the order for execution. In the meantime in- 
structions as to shipment, insuring and financing are given to 
the proper departments. All information regarding these in- 
structions may be found in the card index, where it was en- 
tered when the order was originally received. 

The buyer now proceeds with the purchase of the goods. 
He may know beforehand from what manufacturers he can 
obtain the lowest prices. Possibly it may be necessary for 
him to go out in the open market to obtain the most satisfac- 
tory quotations. Once having received these quotations from 
the various plants the buyer is now ready to place his orders. 

When the orders are placed the buyer is practically finished 
with his phase of the work in connection with the order. The 



102 EXPORTING TO THE WORLD 

shipping clerk must now keep in touch with the shipment 
from the factory to see that there is no delay in placing the 
goods on the ship at the proper time. In the meantime he 
must engage space. When the steamer prepares to load he 
must instruct the factory to ship the goods to the port. 

The bookkeeping department handles the bills for merchan- 
dise sent by the manufacturers. It must prepare to make pay- 
ments in accordance with the terms of sale. It also carefully 
compares the prices and items on the manufacturers' bills 
with the memorandum of the order placed by the buyer to 
see that no mistakes have been made. Once satisfied that the 
bills are correct it then prepares to make payment. 

A draft of the bill of lading and the manufacturer's bill are 
now turned over to the invoicing department so that it can 
make out the documents peculiar to the shipment. The neces- 
sary information concerning the method of making out the 
draft and the taking out of marine insurance, etc., will be 
found on the card index which the invoicing department 
refers to. 

When the invoice is completed the finance department is 
given the draft and other necessary papers which it takes to 
the bank. Payment is received in accordance with the terms 
arranged with the foreign buyer. The methods of financing 
a shipment will be more fully explained in a subsequent 
chapter. 

The shipping clerk's duties in connection with this particu- 
lar shipment end when he checks up on the freight charges, 
and makes payment to the steamship company. 

Advantages of Export 
Commission Houses 

The export commission house is the intermediary between 
the source of supply and the market. A great percentage of 
American foreign trade is transacted through the export com- 
mission house. There is a reason. The export commission 
house is equipped to handle foreign business for American 
manufacturers. It has built up a selling machine in various 
foreign countries. It has gathered to its staff experts in buy- 
ing and selling ; experts in handling export documents ; ex- 
perts in preparing and financing shipments; experts who 



EXPORT HOUSES 103 

understand the conditions in foreign countries, and who know 
the requirements and peculiarities of the different fields. Not 
only one, but any number of manufacturers may benefit from 
an organization of this sort, and yet avoid all responsibility 
and risk in shipping the goods to foreign countries. The 
export commission house is a professional salesman and dis- 
tributor of American products. It is supposed to know its 
business. It has developed its business on the basis of its 
efficiency and success in the past. The manufacturer who is 
seeking a foreign market and yet hesitates against building 
an export department in his own organization naturally will 
look for somebody with a professional knowledge of selling in 
foreign markets. The export commission house supplies that 
knowledge. 

Field of Commission 
Houses Is Limited 

In the use of export commission houses for the development 
of foreign trade, however, it is necessary that the manufac- 
turer proceed with caution. It must be remembered that export 
commission houses do not cover the entire world. Some com- 
mission houses dominate in certain fields, and some in others. 
No commission house is all powerful in every section in which 
it is established. Some houses dominate a certain field in the 
machinery line, others in textiles and still others in office sup- 
plies, etc. It would not be good business for a manufacturer 
to turn over an agency to a commission house without first 
inquiring into the situation in the countries in which he wishes 
to sell his goods. There is considerable truth in the state- 
ment that the great flood of criticism that has been directed 
against commission houses has been provoked from misunder- 
standings on the part of the manufacturer as to the exact 
functions that the commission house to which he has been 
attached can efficiently perform, and the facilities it can offer. 

The commission house has its limitations. It cannot be 
expected to give the same thought and attention in the devel- 
opment of a market for a specific article that the manufac- 
turer would naturally give owing to the various lines that it 
undertakes to handle. It must of necessity scatter its shot. 
Again, as an exclusive agent for an American manufacturer 



104 EXPORTING TO THE WORLD 

it may not be able to induce certain dealers to buy the manu- 
facturer's articles when others of a similar character may be 
purchased from other commission houses with which the 
dealer has transacted business for many years. Foreign buy- 
ers prefer to place their orders through one house in order to 
avoid considerable red tape. They do not like to scatter their 
indents. Therefore, if a manufacturer gives a commission 
house the exclusive agency in a certain field he merely nar- 
rows the market for his product. 

Commission Houses 
Have Complaint 

There has been considerable criticism on the part of com- 
mission houses against the demands made upon them by the 
manufacturers. It is claimed that the manufacturers refuse 
to extend adequate credits to the commission houses, which 
the latter often charge as being beyond reason. In his ad- 
dress before the Sixth National Foreign Trade Convention in 
Chicago, William H. Douglass, president of Arkell & Doug- 
lass of New York, had this to say : "The existing relationship 
between the manufacturer or supplier of goods and the ex- 
porter should be thoroughly gone into. It cannot be truth- 
fully stated that it is overcordial today. This is due to the 
rules formulated by the manufacturers without regard to the 
interest or necessities of the exporter. Dealing with one 
alone, the payment system, all exporters will agree it weighs 
heavily on their shoulders. Manufacturers today have placed 
the export business entirely on a cash basis. They have a 
system of small discounts for cash, with payment at sight, 
five or ten days, and while they know that these discounts 
must be granted to the buyer abroad, they are indifferent to 
the position of the exporter, and do not wish to allow the 
specials if there is the slightest infringement of their pay- 
ment dates. They sell in their domestic trade on long terms 
to parties frequently of little or no standing, dating their bills 
several months ahead and giving sixty to ninety days' time 
for payment; and yet they penalize the exporter by rules 
which require him to pay them generally long before he can 
ship the goods abroad ; and, furthermore, they expect the 
buyer on his part to give credit abroad when he does not re- 
ceive it at home." 



EXPORT HOUSES 105 

Mr. Douglas clearly sums up the advantages of the commis- 
sion house with the following statement : "As a result of 
the war, burdensome laws and restrictions will undoubtedly 
be established, and such laws already exist in South America 
and elsewhere. Preferential tariffs will be granted, partial or 
total exclusion of our goods may be adopted as a policy, or 
again rules may be established of such a restrictive character 
as to practically prevent the importation of our goods. Our 
merchants cannot controvert or change such regulations, as 
they are international questions ; and our government must 
be alive and firm in preventing unjust and unfair discrimina- 
tion by any nation against our commerce. American goods 
must have the open door on an equal basis with any other 
nation's goods to every country in the world. 

"The powerful manufacturer who has handled export busi- 
ness for many years is, naturally, by acquired experience, able 
to take reasonable care of his interests, but to the thousands 
of smaller manufacturers who are now entering the field, it 
may be well to say there are many pitfalls, and great care 
should be used to take the right road. Exclusive agency ar- 
rangements either with American or foreign firms should be 
avoided unless the goods are of a character that require this 
means of exploitation. Hundreds of foreigners are touring 
the country, offering their services on a salary or a commis- 
sion basis, claiming they can do wonders if given rights in 
their home countries ; but it is well to avoid them, or at least 
satisfy yourselves as to their credentials. New companies with 
new connections abroad are willing to accept liberal retainers 
to try to do something which the manufacturer can better do 
himself, or arrange through those who have the proper status. 
Avoid too large a grant of territory abroad to any one house, 
as it it not desirable. Direct trade is unwise at first, if not 
always. Because travelers are sent abroad to introduce goods 
is not a reason why the business must be done direct, and not 
through the regular exporter. Cash for goods from the ex- 
porter is better than financing on the buyer thousands of miles 
away at 90 or 120 days. Drafts have an unfortunate way of 
coming back unpaid quite frequently." 



106 EXPORTING TO THE WORLD 

Future of Export 
Commission Houses 

It is doubtful if the export commission houses can ever be 
eliminated in foreign trade. As a matter of fact it is not 
desirable that such a vital machine to the development and 
extension of our foreign business be scrapped. The commis- 
sion house will always be found in some region where it is 
unprofitable for the manufacturer to reach single handed. 
The commission house will always handle some products that 
will be more convenient for it to handle than any other agency. 
Mr. G. E. Smith, at one time president of the American Manufac- 
turers' Association, in explaining the future of the export com- 
mission house before the Sixth National Foreign Trade Conven- 
tion in Chicago said : "We can thank our export houses, with 
few exceptions, for whatever prestige American goods en- 
joyed in foreign markets before the war. They were the pio- 
neers in finding a demand for our products and in meeting 
that demand where they found it. Our foreign trade in staple 
goods today is largely the result of earnest and effective work 
by these export houses, and I believe that a large field exists 
and will exist in which they will continue to handle business 
more efficiently and more intelligently than the producer 
himself. 

"Outside of raw and semi-raw materials, however, the fu- 
ture of American foreign trade lies with her manufactured 
specialties. Machinery, special tools, labor-saving devices, 
the products of American ingenuity and American factories 
are destined, I believe, to form the great bulk of the new trade 
which awaits our exporters. And it seems to me to be a 
truism that abroad, as well as at home, no one can sell these 
products as well or as successfully as the man who makes 
them. 

"The successful sale of these articles demands two things, 
which can only be afforded by the manufacturer himself. The 
first of these is the creation of an intelligent demand for the 
article. The second is provision for service after the article 
has been bought and is being used." 



Chapter IX 

FOREIGN SALES ORGANIZATIONS 

Advantages of local foreign sales agent — Different func- 
tions OF LOCAL FOREIGN SALES AGENTS — MANUFACTURER'S AR- 
RANGEMENTS WITH LOCAL FOREIGN SALES AGENTS FOREIGN 

BRANCHES AS SELLING AGENCIES 

The sales agent selling American merchandise in foreign 
countries apparently is an indispensable being. The number 
cf these local foreign sales agents is gradually increasing as 
American manufacturers are spreading their activities to 
reach the most important sections of the world. These sales 
agents are not hard to find. They thrive in great numbers in 
the principal markets of the world and the records show that 
a great number of them have performed their functions with 
satisfaction. 

The local foreign sales agent serves in the same capacity as 
the foreign branch office only he orders and sells on his own 
account, finances all orders and depends on the volume of the 
business he has worked up for his own profits. The agent's 
office or store serves as headquarters for stocks or spare parts 
so that customers may be given service in connection with 
their purchase of goods of a technical character. It is not 
uncommon for the sales agent to co-operate with the manu- 
facturer in the promotion of the latter's products. 

Advantages of Local 
Foreign Sales Agent 

The manufacturer who sallies forth to conquer foreign mar- 
kets may be able to cut his preliminary troubles in half by 
connecting with some responsible local foreign sales agent 
who may already have an adequate and well known organiza- 
tion in the field. Once the agent is given an exclusive con- 
tract his organization, which may extend to all parts of the 

107 



108 EXPORTING TO THE WORLD 

country in which he is located, starts working for the manu- 
facturer at home, and his products. The success in the sale 
of his goods will depend very much on the co-operation that 
he extends to his representative in the field. A live agent, 
regardless of the number of non-competing lines he handles, 
may do wonders for his principal if the proper sort of co- 
operation is extended by the latter. 

Needless to say, the skillful attention of a local sales agent 
is invaluable where personal attention of a scientific and tech- 
nical character is involved. A manufacturer producing an 
article requiring mechanical knowledge would find it difficult 
to market it unless he were fully prepared to render a certain 
amount of service. No customer would want to wait from 
six to ten weeks for the shipment of an extra part of an article 
which he could not obtain in his own country. An agent well 
supplied with these spare parts can easily eliminate such 
delays. 

Local Foreign Sales Agent 
May Develop Business 

The local foreign sales agent — if he is a live one — can 
always be depended upon to take advantage of every oppor- 
tunity to turn over a deal for his principal. He is in daily 
touch with conditions, with the launching of new enterprises 
of an industrial character, and with the activity of his com- 
petitors. As a salesman and a developer of new business he 
will never lose an opportunity $o sell the goods for which he 
is the exclusive representative. Co-operating with the manu- 
facturer he receives and distributes samples and catalogues 
and other literature that is aimed to advertise the line. The 
manufacturer's confidence in his foreign agent established, 
no time should be wasted in giving him full support in the 
development of business. The manufacturer should at all 
times co-operate to the fullest extent. He should consult with 
him on matters involving sales-promotion work. He should 
keep his agent well supplied with advertising literature to 
mail to prospective customers. An occasional visit on the part 
of the manufacturer or his representative should be made, if 
possible. 



FOREIGN SALES ORGANIZATIONS 109 

Sales Agent May 
Obtain Credit Data 

The policy of appointing local foreign sales agents has an ad- 
vantage also in the matter of obtaining credit information. A 
good sales agent keeps in close touch with the bankers of the com- 
munity as well as with other commission agents, credit agen- 
cies and collection firms. Such information is occasionally 
asked of the sales agent. In exchange for this information 
the sales agent obtains a very good idea of the status of a 
great number of merchants, which is of inestimable value to 
the manufacturer. 

Trying to settle some misunderstanding by mail involves 
considerable time and bother. Even if correspondence is 
resorted to there is the danger that the letter will be mis- 
understood, and instead of soothing the feelings of the man 
at the other end it is more than likely to increase the aggra- 
vation. There is nothing like having a good man on the 
ground to smooth over these matters and to adjust or com- 
promise claims whenever they arise, or to obtain settlement 
from slow pays. A good agent is not only in a position to 
handle these delicate situations, but his personality may lead 
to the restoration of complete harmony between manufacturer 
and customer. This is something that a letter hardly ever 
does. 

The Meaning of a 
'Del Credere* Agent 

When a local foreign sales agent assumes part or all the 
risks involved in the selling of goods to local customers he is 
generally called a "del credere" agent. A "del credere" agent 
usually guarantees the payment of goods, but in return he 
may ask for a much larger commission, which is called a 
"del credere" commission. 

"In case of need" is a phrase used by manufacturers to 
notify bankers of the name and address of an agent at the 
other end who may be entrusted to take care of the manufac- 
turer's interests in connection with protested drafts, or with 
the disposal of the goods to other merchants. 



110 EXPORTING TO THE WORLD 

Merchant Agents 
Sole Distributors 

Sometimes a manufacturer may appoint a merchant as his 
sole distributor in a certain territory. The goods are actually 
sold to the merchant and he is ordinarily supposed to guar- 
antee a certain volume of business in return for the exclusive 
rights for his territory. The advantages of having a merchant 
as sole distributor are many. The manufacturer will carry 
only one account on his books in this instance. He need not 
bother about credit risks in which many customers are in- 
volved. His risk is reduced to one account — that of the mer- 
chant. Again, the merchant may have developed a strong 
organization in his territory which will be of great value to 
the manufacturer. As a purchaser of the manufacturer's 
goods outright the merchant will show considerable interest 
in their sale. He must depend upon the turnover for his 
profits. There is this danger in the appointment of merchant 
agents as sole distributors, however: In a majority of cases 
the merchant agent's competitors conduct retail establish- 
ments, and he knows that he cannot sell his goods to these 
competitors. His field is narrowed. It is up to him, then, to 
find customers who are not attached to his wholesale com- 
petitors. The motives of a merchant agent should also be 
closely looked into. Often a merchant agent obtains the ex- 
clusive agency for an article merely to suppress it. This is 
done in order that other competitive lines for which he is 
sole agent and which offer larger sales or profits may have a 
clear field. 

How Local Foreign Sales 
Agents Are Selected 

It has been remarked quite often that Americans only 
should be in charge of the foreign sales of an American manu- 
facturer. The basis for this statement lies in the belief that 
foreigners are untrustworthy, and that they will always give 
the American article the worst of it when it is competing 
with an article made in some other favored country. There 
may be some cases where foreigners have endeavored to give 
the goods of their country every possible advantage over 




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FOREIGN SALES ORGANIZATIONS 111 

American-made products, but this is the exception and not 
the rule. Foreign sales agents are out for the money as a 
general rule. If they can make more profits from the sale 
of an American product than they can from an article shipped 
from their native country they will take the agency of the 
former in preference to the latter. Too many cases are known 
where Germans have successfully acted as agents for English 
goods, and English for American goods, and even Japanese 
for American goods, to take such statements too seriously. 

The first consideration in the selection of an agent is his 
character and reputation in the community in which he is 
doing business. As in the case of the traveling salesman, 
the customer judges the home office by the character of the 
representative in the field. 

The fact that the agent has been long established and is a 
powerful factor in the market should not weigh too heavily 
in his favor. He may take the exclusive agency and give it 
mediocre attention, whereas a young institution desirous of 
growing may want that very article which the manufacturer 
offers to increase its business. 

Manufacturers often entrust their traveling salesmen to 
appoint agents in the countries through which the former 
travel. These agents should be able to produce letters of 
recommendation from other manufacturers for whom they 
have operated, and other data as information for the manu- 
facturer. The manufacturer must first satisfy himself that 
he can place implicit confidence in his foreign representative. 
Once having satisfied himself on this score, he must be pre- 
pared to extend all the co-operation that that confidence 
justifies. 

Business Arrangements 
With Sales Agent 

The contract with the local foreign sales agent should be 
prepared carefully. It should be carefully written so that dis- 
agreeable controversies may be avoided. The following points 
should be included in a contract with a local foreign sales 
agent: (a) Duties of agent; (b) authority; (c) terms upon 
which he is to do business for his principal ; (d) to what ex- 
tent is the principal liable and responsible? (e) the territory 



112 EXPORTING TO THE WORLD 

over which agent shall exercise the exclusive rights to sell 
the manufacturer's article; (f) duration of the contract; (g) 
the rate of commission and how it shall be applied ; (h) terms 
of settlement on commissions; (i) the amount of business 
required to avoid cancellation; (j) agreement not to handle 
competitive lines. 

The foregoing are some of the salient features that should 
be included in a contract with a local foreign sales agent. In 
order to make it more forceful the contract should be officially 
executed and attested. The consul of the country in which 
the manufacturer is to do business should witness the prin- 
cipal's signature. On the other hand, the American consul 
in the foreign country should perform similar service for the 
agent. 

One clause in the contract should receive careful attention. 
This clause refers to the assignment of territory. A manu- 
facturer who does not know geography may sign away the 
sales rights to an entire continent. An agent in Santiago, 
Chile, may obtain the exclusive sales rights for Argentina and 
Brazil from a manufacturer who is not familiar with the great 
distances involved in those countries. Territory should al- 
ways be limited to a certain line. 

The commission given to a sales agent depends on the line 
as a general rule. Commissions may be as low as 1 per cent. 
or as high as 25 per cent. The commission figure is deter- 
mined by the manufacturer himself. Time of payment also 
varies. There are no set rules. The manufacturer should see 
that the sales agent receives all commissions arising from 
the sale of goods in his territory in accordance with the terms 
of the contract. It is important, therefore, that the manu- 
facturer should know where goods purchased by commission 
houses are bound for in order that he may give proper credit 
and protection to his sales agent on the field. 

Foreign Branches as 
Selling Agencies 

A foreign branch may be merely a selling agency or it may 
be a merchant handling a large stock of goods. The establish- 
ment of a foreign branch requires delicate handling. Bitter 
opposition from old merchants is likely to be encountered, 



FOREIGN SALES ORGANIZATIONS 113 

and in order to reduce this to a minimum it is necessary to 
use tact and diplomacy. Intelligently operated, the branch 
can be made a success. 

When the selling agency begins to stock up with goods 
from the home factory it offers a service that its customers 
are likely to appreciate. An immediate supply of goods re- 
moves long delays encountered in ordering and awaiting ship- 
ments from the source of supply. Often an importer prefers 
to buy an inferior article at home rather than to take the 
trouble of sending for it thousands of miles away. The for- 
eign branch, by handling large stocks, relieves him of this 
trouble. 

It must be remembered, however, that the foreign branch 
is an expensive proposition when it is carrying stocks. Over- 
head expenses may be high. Interest in the investment must 
be considered, and doing business in a foreign country is 
likely to run up miscellaneous costs. It must be remembered, 
also, that foreign branches are subject to the laws of the 
country in which they are operating. They must take out 
licenses, and be prepared to pay the regular taxes, which may 
come high in some instances. 

Combination branch offices have been tried with consider- 
able success. Failures have been due to the unintelligent 
selection of the personnel to conduct these combinations as 
well as to the petty jealousies and desires on the part of the 
member manufacturers to dictate the policy of the combina- 
tion. Quite often a manufacturer feels that he is not getting 
enough out of the combination in proportion to his expenses 
in the upkeep, so he decides to drop out. It seems obvious, 
however, that in order to obtain permanent success some 
genius must evolve a working plan that will satisfy the desires 
of all those who subscribe to the combination. As far as is 
known such plan has not as yet been developed so as to meet 
all these requirements. 



Chapter X 

COMBINATIONS IN FOREIGN TRADE. 

The Webb-Pomerene law — Criticism and defense of Webb- 
Fomerene law— Provisions of the measure — How combina- 
tions are made under the Webb-Pomerene law. 

The Webb-Pomerene Law, approved April 10, 1918, permits 
combinations in export trade. In the words of a critic the law 
permits "our manufacturers to do to a foreign consumer who 
has no vote in our affairs what cannot be done to the people of 
the United States, whose constitutional rights enable them ef- 
fectively to express their approval or displeasure." On the other 
hand a champion of the measure declares that "the essential 
object of this law is to give American exporters a fair chance 
to compete with the exporters of other countries by enabling 
them to reduce expenses of marketing, thus permitting the 
quotation of such prices in foreign countries as will make 
American products attractive to the consumer." 

It will be remembered that the law caused considerable con- 
cern in foreign countries when it was enacted, and fears were 
expressed on all sides that it was probably an "American de- 
vice to control the world's markets at their own prices." 
While the provisions of the law are aimed to check unfair 
methods and abuse in foreign markets, it will be necessary, 
however, to prove that it is simply an instrument to assist 
American manufacturers in developing foreign business along 
legitimate lines, and not a tool to destroy legitimate competi- 
tion. The burden of proof rests with those manufacturers 
who operate in foreign countries under the provisions of the 
Webb-Pomerene Law., 

In this connection it is well to remember that the great bulk 
of our American foreign trade has been built by individual 
effort — by individual export houses and manufacturers. While 
these merchants have often encountered problems and disad- 
vantages of one kind or another in the different markets, 

114 



COMBINATIONS IN FOREIGN TRADE 115 

nevertheless, by sheer force of initiative and enterprise, they 
have been able to overcome these obstacles without the neces- 
sity of combining along gigantic proportions. The statistics 
of our foreign commerce prove this statement. 

The chief advantage of the Webb-Pomerene law, it seems, is 
to permit small manufacturers who are unable to competently 
develop the foreign market to combine for such purposes and 
to be able to sell at such prices that will meet the competition 
of other foreign merchants. If this is the real purpose of the 
law then there should be no justification in the criticisms 
against it. 

Tzvo Opposite Views 

en the W ebb-P omerene Lazv 

It is interesting to read two very recent statements in con- 
nection with the operation of the Webb-Pomerene law that 
appeared in the New York Journal of Commerce. One is 
from an Australian business man complaining against the law 
and the other is from an American export man defending its 
provisions. 

The name of the foreign critic of the law is Mr. William 
Lewis of Sydney, N. S. W., and he writes as follows : 

"The people in this country (Australia) are not disposed to 
view with equanimity the possible effect of the operation of 
the Webb-Pomerene Act, now operative in America. 

"Right or wrong, an impression exists in this country that 
the purpose of this bill is to legalize, for the exploitation of 
commercial fields outside of the United States, practices and 
methods which the United States Government has deemed it 
necessary to suppress within its own borders, as being inimi- 
cal to the public welfare. 

"Competitive business enterprise is commendable, and to 
an enlightened country such as Australia, welcome. But when 
that enterprise, instead of being competitive, merges into a 
powerful combination with the express purpose of exploiting 
and capturing the Australian market, welcome quickly changes 
to resentment. 

"I have before me the letterhead of one of the smaller recent 
American combinations. After naming the coalesced compa- 
nies, it ends with the sentence : 'Combined capital twelve mil- 



116 EXPORTING TO THE WORLD 

lion dollars.' This has an unpleasant sound, savoring of a 
threat. It is not agreeable to be asked to choose between the 
rattling of the Prussian sabre and the American cash box. 

"Australia, in common with every member of the British 
Empire, more firmly welded than ever before, holds a powerful 
weapon in reserve which she may be forced to use without 
scruple and which she can so use without the slightest breach 
of international law. 

"Suppose, for instance, that the American manufacturers 
of cotton piece goods, one of England's most important in- 
dustries, taking advantage of the Webb measure, enter into 
a powerful combination, controlling hundreds of millions of 
capital. Basing their expectations of business in this country 
on the fact that the present British preferential tariff in Aus- 
tralia is practically negligible, they establish central offices in 
Sydney. Instructions to the general manager from the board 
of directors in New York are to the effect that he is to meet 
and beat competition from whatever source. Such methods, 
carried to their legitimate conclusion, would mean the com- 
plete extinction of British trade in cotton piece goods so far 
as Australia is concerned. This will never be allowed to 
happen. 

"In the event of such a happening the immediate and prac- 
tical reply will be the possible duty of 50 per cent, from any 
and all countries outside the British Empire; from all coun- 
tries constituting the British Empire, either free or a tariff 
for revenue only. Under these new conditions the Sydney 
office of the American cotton piece goods combine, if it ever 
opened, would close within a month. 

"I am, perhaps, to some extent qualified to speak impar- 
tially, since, though English by birth and parentage, I have 
for many years represented American manufacturers in Aus- 
tralia." 

W. H. Mahoney 
Answers Criticism 

In answering Mr. Lewis's criticisms Mr. W. H. Mahoney, 
manager of the Foreign Trade Bureau of the Merchants' 
Association of New York, said: 

"When the Webb-Pomerene bill first became law some such 



COMBINATIONS IN FOREIGN TRADE 117 

opposition was sounded at Buenos Aires as is now voiced in 
Australia in the protest which was published in the New 
York Journal of Commerce from Sydney, but when the ques- 
tion came to be thoroughly understood it died down. 

"Only the other day I had a business man in from Australia 
who is interested in the paper industry. He did not appear 
to be frightened by the Webb law and he said he was going 
right ahead with his plans for the sending of paper from this 
country to Australia. I am inclined to think that there 
may be some merchants over there who may be unduly 
alarmed. I can hardly believe that it is the general feeling 
of business in Australia, but rather that of individual firms. 

"As for the threat of imposing heavy preferential duties to 
offset the supposed effect of the Webb law, why, that would 
be nothing new. Preference duties have already been de- 
cided upon and were agreed to at a conference in London 
when the Colonial representatives were present. 

"Besides, there is another aspect to the question. If under 
the combinations effected of small traders whereby they can 
economize by sharing their advertising, shipping and over- 
head charges — for that was what is really intended — it puts 
them in a position to compete for trade by supplying goods 
at a lower rate than others, it will be the Australian people 
or consumers who will get the benefit of it. The intention of 
the competition is not to strangle trade elsewhere but to 
compete fairly for it. 

"As I understand it in my talks with exporters, it is not 
Australia that is going to suffer from the Webb law or is 
going to be affected to any large extent, as the industries 
under which there is a combination where business is done 
with the Commonwealth are very few." 

Combinations Must 

Obey W ebb-P omerene Law 

In his remarks on the Webb-Pomerene law before the Sixth 
National Foreign Trade Council John Walsh, former chief 
counsel of the Federal Trade Commission pointed out the 
necessity of combinations engaged in developing foreign trade 
to follow the straight and narrow path, in the following 
sentence: 

"The ultimate success or failure rests very largely on our 



118 EXPORTING TO THE WORLD 

own business men. If the law is to serve as a vehicle for 
commercial aggrandizement, to benefit the strong at the ex- 
pense of the weak ; or if it is to be used for selfish and un- 
scrupulous exploitation of foreign markets, or for the purpose 
of manipulating domestic prices, then the expectations of the 
high-minded and broad visioned men who were its sponsors 
would be shamefully thwarted and foiled. 

"I believe that neither the American public nor foreign 
nations would allow their respective public interest to be in 
any way detrimentally affected by any unfair and question- 
able commercial trade practices of an association operating 
under the Webb act. 

"And besides, let us not forget that the Webb act has 
teeth in it. Under its provisions the remedies in Section 
Five of the Federal Trade Commission act against unfair 
methods of competition are made to extend to unfair methods 
of competition used in export trade against competitors en- 
gaged in export trade, even though the acts constituting such 
unfair methods are done without the jurisdiction of the United 
States. 

"Under the Webb act the United States Government de- 
clares itself in unmistakable terms as insisting on fair and 
honorable business methods in export trade." 

The popularity of this new method of developing foreign 
business by combinations is indicated in reliable reports to 
the effect that over 80 concerns are already engaged in oper- 
ating in foreign countries under the provisions of the Webb 
act. The law has been in operation hardly over a year. Ex- 
port associations have been formed in a variety of industries, 
including silks, chemicals, copper, textiles, hardware, lumber 
and others. Small as well as large associations have been 
formed. 

Provisions of 

the W ebb-P omerene Law 

The entire text of the Webb-Pomerene law is herewith 
quoted : 

"An Act to promote export trade, and for other purposes. 

"Be it enacted by the Senate and House of Representatives 
of the United States of America in Congress assembled, 
That the words 'export trade' wherever used in this Act mean 



COMBINATIONS IN FOREIGN TRADE 119 

solely trade or commerce in goods, wares, or merchandise 
exported, or in the course of being exported from the United 
States or any Territory thereof to any foreign nation; but 
the words 'export trade' shall not be deemed to include the 
production, manufacture, or selling for consumption or re- 
sale, within the United States or any Territory thereof, of 
such goods, wares, or merchandise, or any act in the course 
of such production, manufacture, or selling for consumption 
or resale. 

"That the words 'trade within the United States' wherever 
used in this Act mean trade or commerce among the several 
States or in any Territory of the United States, or in the Dis- 
trict of Columbia, or between any such Territory and an- 
other, or between any such Territory and Territories and any 
State or States or the District of Columbia, or between the 
District of Columbia and any State or States. 

"That the word "association" wherever used in this Act 
means any corporation or combination, by contract or other- 
wise, of two or more persons, partnerships, or corporations. 

"Section 2. That nothing contained in the Act entitled 
"An Act to protect trade and commerce against unlawful re- 
straints and monopolies," approved July 2nd, 1890, shall be 
construed as declaring to be illegal an association entered 
into for the sole purpose of engaging in export trade and 
actually engaged solely in such export trade, or an agree- 
ment made or act done in the course of export trade by such 
association, provided such association, agreement, or act is 
not in restraint of trade within the United States, and is not 
in restraint of the export trade of any domestic competitor 
of such association; and provided further, that such associa- 
tion does not, either in the United States or elsewhere, enter 
into any agreement, understanding, or conspiracy, or do any 
act which artificially or intentionally enhances or depresses 
prices within the United States of commodities of the class 
exported by such association or which substantially lessens 
competition within the United States or otherwise restrains 
trade therein. 

"Section 3. That nothing contained in Section Seven of the 
Act entitled "An Act to supplement existing laws against 
unlawful restraints and monopolies, and for other purposes, 
approved October 15th, 1914, shall be construed to forbid the 



120 EXPORTING TO THE WORLD 

acquisition or ownership by any corporation of the whole or 
any part of the stock or other capital of any corporation or- 
ganized solely for the purpose of engaging in export trade, 
and actually engaged solely in such export trade, unless the 
effect of such acquisition or ownership may be to restrain 
trade or substantially lessen competition within the United 
States. 

"Section 4. That the prohibition against "unfair methods of 
competition" and the remedies provided for enforcing said 
prohibition contained in the Act entitled "An Act to create 
a Federal Trade Commission, to define its powers and duties, 
and for other purposes," approved September 26, 1914, shall 
be construed as extending to unfair methods of competition 
used in export trade against competitors engaged in export 
trade, even though the Acts constituting such unfair methods 
are done without the territorial jurisdiction of the United 
States. 

"Section 5. That every association now engaged solely in 
export trade, within 60 days after the passage of this Act, 
and every association entered into hereafter which engages 
solely in export trade, within 30 days after its creation, shall 
file with the Federal Trade Commission a verified written 
statement setting forth the location of its offices, or places 
of business, and the names and addresses of all its officers, and 
of all its stock holders or members, and if a cor- 
poration, a copy of its certificate or articles of in- 
corporation and by-laws, and if unincorporated, a copy 
of its articles or contract of association, and on 
the first day of January of each year thereafter, it shall make 
a like statement of the location of its offices or places of busi- 
ness and the names and addresses of all its officers and of 
all its stockholders or members and of all amendments to and 
changes in its articles or certificate of incorporation or in its 
articles or contract of association. It shall also furnish to the 
Commission such information as the Commission may re- 
quire as to its organization, business, conduct, practices, man- 
agement and relation to other associations, corporations, part- 
nerships, and individuals. Any association which shall fail 
so to do shall not have the benefit of the provisions of section 
two and section three of this Act, and it shall also forfeit to 
the United States the sum of $100 for each and every day oi 



COMBINATIONS IN FOREIGN TRADE 121 

the continuance of such failure, which forfeiture shall be pay- 
able into the Treasury of the United States, and shall be re- 
coverable in a civil suit in the name of the United States 
brought in the district where the association has its principal 
office, or in any district in which it shall do business. It shall 
be the duty of the various district attorneys, under the di- 
rection of the Attorney-General of the United States, to prose- 
cute for the recovery of the forfeiture. The costs and ex- 
penses of such prosecution shall be paid out of the appropria- 
tion for the expenses of the courts of the United States. 

"Whenever the Federal Trade Commission shall have rea- 
son to believe that an association or any agreement made or 
act done by such association is in restraint of trade within 
the United States or in restraint of the export trade of any 
domestic competitor of such association, or that an associa- 
tion either in the United States or elsewhere has entered into 
any agreement, understanding, or conspiracy, or done any act 
which artificially enhances or depresses prices within the 
United States of commodities of the class exported by such 
association or which substantially lessens competition within 
the United States or otherwise lessens trade therein, it shall 
summon such association, its officers, and agents to appear 
before it, and thereafter conduct an investigation into the al- 
leged violations of law. Upon investigation, if it shall con- 
clude that the law has been violated, it may make to such 
association recommendations for the readjustment of its busi- 
ness, in order that it may thereafter maintain its organization 
and management and conduct its business in accordance with 
law. If such association fails to comply with the recom- 
mendations of the Federal Trade Commission, said Com- 
mission shall refer its findings and recommendations to the 
Attorney-General of the United States for such action thereon 
as he may deem proper. 

"For the purpose of enforcing these provisions the Federal 
Trade Commission shall have all the powers, so far as ap- 
plicable, given it in "An Act to create a Federal Trade Com- 
mission, to define its powers and duties, and for other pur- 
poses." Approved April 10, 1918." 

Summarized, the advantages to be derived from the Webb- 
Tomerene law are as follows: 



122 EXPORTING TO THE WORLD 

(a) Combination produces economies in production and dis- 
tribution. 

(b) Standardization of products results in greater econo- 
mies of production. 

(c) Standardization would improve the quality of merchan- 
dise, and enhance the value of American goods overseas. 

(d) Combination would eliminate waste by an intelligent 
distribution of orders to factories best fitted to turn them out. 

(e) Combination would mean specialization and thus lower 
costs. 

(f) The greatest saving of all would be the elimination of 
duplication of selling organizations, warehouses, branch of- 
fices, advertising, etc. 

(g) Economies in shipment would be effected. 

(h) Combinations would be able to develop foreign markets 
with the highest degree of efficiency, and the maximum results 
at minimum costs to participants. 

(1) The financing of foreign sales and the obtaining of 
credit information would be facilitated. 

Combinations as Necessity of 
Meeting Foreign Competition 

Is it necessary to combine in the United States in order to 
meet foreign competition abroad? 

In view of our successes in the foreign field in the past — 
and this means our successes with manufactured articles as 
well as with our raw materials — it would seem that declara- 
tions of the necessity of combining to meet the cut prices of 
our most dangerous competitors overseas are a bit far-fetched. 
Not long ago a well-known exporter who understands for- 
eign trade as well, perhaps, as anyone else in America, said 
that the results promised under the provisions of the Webb- 
Pomerene Act were being exaggerated. 

"I don't quite understand why there is so much enthusiasm 
over this measure," he said. "It would seem that American 
manufacturers have never had a show in foreign markets until 
this law came into effect to show them the way to the prom- 
ised land. Personally, I believe it will do some good in some 
quarters — in places where basic materials are involved in 
sales abroad. There is no question that there would be an 
economic saving in this respect. But where we are hunting 



COMBINATIONS IN FOREIGN TRADE 123 

for markets in foreign countries for our typewriters, our auto- 
mobiles, our sewing machines, our stationery, and hundreds 
of other manufactured articles, I am afraid that the combina- 
tion will serve as a hindrance instead of an advantage. Why? 
Because these manufactured articles I have just mentioned 
need specialized selling effort, and that is practically impossi- 
ble under huge combinations such as the Webb-Pomerene Act 
permits. It means lost identity of an article." 

Combinations in 
Foreign Countries 

The combination idea seems to have had its growth in 
Europe. Before the war export combinations were quite com- 
mon in the principal countries of Europe, and seemed to have 
reached the highest point of efficiency in Germany, where the 
"cartel" system was one of the principal factors that made 
German foreign trade what it was up to the few months pre- 
ceding the great war that shattered her commerce. In this 
country there were 600 important cartels, embracing every im- 
portant industry in the country. In some instances, however, 
these cartels were not created primarily to meet competition 
of other foreign countries in overseas business, but to stifle 
competition at home, and to control the market. An instance 
of this policy is shown in the great German dye-color industry 
operated as a unit in foreign trade under an agreement by two 
powerful concerns working under a fifty year contract not to 
compete against each other. Other gigantic combinations were 
to be found in the electrical equipment industry, the coal and 
coke industry, and the iron and steel industry, the products of 
which were sold through great centralized selling agencies to 
all parts of the world. 

Other Nations Have Great 
Combinations for Export 

Nor was Germany alone in this policy of combining to 
efficiently develop and sell products in foreign countries. We 
find gigantic syndicates in France, Belgium, Italy, Russia, 
Austria, Switzerland, Sweden and Greece. In South America 
in certain countries we find producers united in joint selling 
agencies to control the market, probably to stifle competition 
and to efficiently sell goods in foreign countries. 

Japan has a textile organization that is developing and oh- 



124 EXPORTING TO THE WORLD 

taining the cotton goods trade of North China. A "tea council'' 
controls the tea trade of that country. Other industries in 
Japan are rapidly falling in line to combine, and they 
have not only the approval of the Government but its actual 
support. 

England has not committed itself to the policy of 
organizing powerful combinations for foreign trade as strongly 
as other nations. One reason is because the United Kingdom 
has been able to develop excellent markets for its manufac- 
tured product in all corners of the earth. Her most excellent 
selling methods, her great chain of branch banks, combined 
with the most efficient merchant marine in the world, have 
given that country an advantage that relieved her of the 
necessity of creating "cartels" to obtain new business. 

In spite of this tremendous trade that has been developed 
by Great Britain in foreign countries we find her, nevertheless, 
engaged in combining to market certain basic products for 
overseas sales. England's coal, for instance, is marketed in 
South America and other parts of the world through central 
selling agencies in which producing companies, selling com- 
panies, steamship lines and foreign distributing companies co- 
ordinate their efforts. This policy is followed in the cement 
trade as well. Since the end of the Great War, however, 
Great Britain has taken rapid strides in the further develop- 
ment of the combination or "cartel" idea, and is expected to 
take a prominent part in the regaining of her immense trade, 
which she temporarily lost during the strife in Europe. 

Combinations Must 
Compete With Combinations 

The outgrowth of this combination idea all over the world 
will mean that the United States will be forced, whether she 
likes it or not, to meet the plans of her competitors in the 
most efficient and intelligent form that legal means will justify. 
The Webb-Pomerene Act grants the American manufacturer 
or exporter adequate power to cope with our trade rivals. In 
the language of the Federal Trade Commission : "If Ameri- 
cans are to enter the markets of the world on more nearly 
equal terms with their organized competitors and their organ- 
ized customers, and if small American producers and manu- 



COMBINATIONS IN FOREIGN TRADE 125 

facturers are to engage in export trade on profitable terms, 
they must be free to unite their efforts. 

"Without any export organization foodstuffs and raw mate- 
rials can readily be sold at some price, but to avoid needless 
expense in distribution, to meet formidable foreign buying 
agencies, and to insure profitable export prices, co-operation 
among American producers of such commodities is desirable. 

"In the sale of factory products co-operation is even more 
desirable. Such goods must be advertised, demonstrated, and 
a market created abroad, often in the face of the keenest com- 
petition from great combinations of foreign manufacturers. 
Obviously, only strong organizations can undertake this con- 
test. If groups of American manufacturers and producers, 
either of competing or non-competing goods, can combine 
their efforts they can share the cost of developing new mar- 
kets, establish themselves firmly, extend credit more readily 
to foreign customers, and compete more successfully with for- 
eign syndicates and cartels." 

How German Cartel 
System Was Developed 

It will be necessary to briefly review the German "cartel" 
system as an illustration of the extent to which this policy 
grew. Germany is taken as an illustration merely because 
combinations were more fully developed there than in any 
other country. 

A German writer says cartels are "associations, founded by 
contract for certain periods of time, of independent enterprises 
belonging to kindred branches of industry or of branches of 
industry with nearly identical interests, the individual mem- 
bers of the association retaining their independence but join- 
ing for the purpose of regulating production and sales accord- 
ing to common points of view and in the common interest." 

This definition practically covers American combinations 
under the Webb-Pomerene Act. 

A distinction between a trust and a cartel must be drawn, 
however. Cartels are not permanent. Members can with- 
draw and recover their complete independence if they choose. 
In a trust, such as it is known in America, there is centralized 
authority in a single organization, and it is permanent. A 



126 EXPORTING TO THE WORLD 

trust is not a combination of corporations, but a single cor- 
poration in itself. 

The growth of the cartel system in Germany is reflected in 
statistics issued in that country in 1903, showing that there 
were 385 cartels at that time doing business in Germany, which 
were distributed among the different industries as follows: 

Cartels Cartels 

Coal 19 Glass 10 

Iron 62 Bricks 132 

Metals (excluding Iron).... 11 Stones, earths 27 

Chemicals 46 Clay 4 

Textiles 31 Foodstuffs 17 

Leather, rubber 6 Electrical 2 

Wood 5 Others 7 

Paper 6 

These 385 cartels represented 12,000 plants, and the mining 
and chemical industries ranked first. 

They grew in number rapidly, and in 1911 they were esti- 
mated to have reached a total of 600 in Germany. 

How German Banks 
Helped the Cartels 

The methods employed by the great German banks in aid- 
ing these cartels is told by the Federal Trade Commission as 
follows : 

"The large German banks have played a potent part in the 
development of cartels and combinations, particularly in the 
mining, the iron and steel, the electrical, the potash, and the 
chemical industries. The four great Berlin banks, viz., the 
Deutsche Bank, the Dresdener Bank, the Darmstadter Bank, 
and the Disconto-Gesellschaft, dominated the German bank- 
ing world. Until recently there was a fifth, the A. Schaaff- 
hausen'scher Bankverein, now absorbed by the Disconto. The 
A. Schaaff hausen'scher Bankverein was formerly particularly 
active in organizing cartels, and maintained a special organiza- 
tion, the "Syndikatskontor d. A. Schaaffhausen'scher Bank- 
vereins G. M. B. H. to act as selling agency and clearing 
house for industrial combines. With their extensive system 
of directors among industrials and with their participation in 
financing such enterprises, the great banks have been able 
strongly to influence German industry, and they have used 
this influence lo eliminate competition and to encourage con- 
centration. 



COMBINATIONS IN FOREIGN TRADE 127 

"Thus the German electrical industry, a debtor industry, 
has been dependent at all times upon the co-operation of banks 
in its development and concentration. The widely ramified 
organization of investing, operating, and subsidiary companies 
of all kinds within the two groups that dominate the German 
electrical industry has been developed and prompted largely 
by banks interested in the various companies and backing 
these two great groups. In the metal trades the Metallgesell- 
schaft, of Frankfort on the Main, in which the Merton inter- 
ests are centered, has built up and controls its world wide 
business enterprises through a number of financial institu- 
tions, banks, or holding companies in different countries. 
These have been organized for the special purpose of obtaining 
outside and foreign capital. For investment in new mining 
and similar enterprises and to maintain control over them 
through majority stock ownership. The potash industry offers 
another good example of the potent influence of banks and 
fostering combinations." 

Different Kinds 
of German Cartels 

German cartels may be divided into the following classes: 

(a) Agreements covering selling terms, so-called "Kondi- 
tionen" cartels. 

(b) Price cartels. 

(c) Selling cartels or syndicates. 

Cartels in which agreements are made as to selling terms: 

These cartels represent the lowest form of cartel organiza- 
tion. Under this form agreements as to payments, conditions 
of sale, and handling of samples are made. 

Price cartels: 

Cartels of this character are organized purely to influence 
prices without centralizing sales or purchases. Price cartels 
are the most numerous, each having distinct methods of doing 
business. 

Syndicates or selling cartels : 

These are the most highly developed of the German cartels, 
having the most rigid and centralized organization. The 
merchandise of those belonging to the cartel is disposed 
through a central selling agency. 

These German cartels extended their activities into foreign 



128 EXPORTING TO THE WORLD 

countries, using selling agencies through which to place their 
wares. Through these selling agencies prices were fixed, com- 
bined advertising campaigns were planned, and development 
of territory undertaken. Operating with banks, these cartels 
were enabled to obtain invaluable trade data such as credit 
information, business conditions — all of which activities were 
principal factors in the building up of Germany's foreign trade 
before the war. 

Instances are known where manufacturers producing non- 
competing but kindred articles have combined together for de- 
veloping of foreign markets. This policy was adopted in the 
South American and Chinese trade with great results. German 
cartels representing the electrical industry were very active in 
Latin America before the war. Entire power plants were 
developed, equipped, financed, and even operated by German 
cartels. In China the same policy is said to have been pur- 
sued with respect to mines. Competitors of foreign countries 
who found themselves representing single lines found it diffi- 
cult to compete with the Germans, who offered to undertake 
a whole job for the Chinese. The rapid development of trade 
in China and South America is due to the efforts of German 
industry under the cartel system. 

How Foreign Combinations 
Affect American Commerce 

What effect foreign combinations have on our export trade 
is told by the Federal Trade Commission in strengthening its 
position that American combinations under the Webb-Pom- 
erene Act are necessary to combat competition overseas : 

"The greater part of American export trade has been with 
European nations," says the Commission. "When American 
manufacturers and producers are exporting to any of these 
countries they must meet powerful combinations of producers 
and dealers there. Some of these combinations are interna- 
tional and own or control, among others, American producing 
companies. They now have in this country oil wells, coal and 
metal mines, smelters, refineries, and mills. This makes it 
more difficult to compete with them in the European markets. 
In other cases American manufacturers and producers must 



COMBINATIONS IN FOREIGN TRADE 129 

deal with combinations among the European buyers of their 
products. In a few American industries, such as petroleum, 
steel, and farm machinery, powerful single organizations are 
equipped to meet foreign combinations on substantially equal 
terms. But even in these industries, as well as in those where 
no single concern towers above its fellows, there are numerous 
small and moderate-sized producers who act separately in con- 
ducting their export business. It thus results from the con- 
ditions of the organization of industry abroad and at home 
that in the great foreign commercial countries American com- 
panies must often compete separately against combinations 
of foreign producers and must often sell separately to combi- 
nations of foreign buyers. 

"This condition is repeated when American and foreign 
manufacturers compete in the markets of countries alien to 
both, as when American manufacturers compete with German 
or English in South America. Here, again, individual Ameri- 
can exporters must encounter the united opposition of foreign 
manufacturers in many important lines of trade. In fact, spe- 
cial cartels and syndicates are often formed in European coun- 
tries expressly for export trade. The combinations can afford 
long and costly campaigns to gain foreign markets, and they 
can gain favorable terms to purchasers. Moreover, the chief 
foreign trading nations not only have a distinct advantage over 
the United States in ocean shipping under their own flags, better 
foreign-trade banking and credit organizations, and greater in- 
vestments in less developed parts of the world, but also it is their 
policy to unite these various interests with their industrial com- 
binations into mose effective organizations for the vigorous 
promotion of export business. 

"These are the salient facts concerning the character and 
prevalence of cooperation and combination among foreign 
manufacturers, producers, and dealers. Foreign concerns co- 
operate in both home and export trade to a greater extent 
than American concerns do. The advantage and necessity of 
preventing such combinations in the American domestic trade 
is fully recognized by the Commission, but the export trade 
presents, in its opinion, a different problem. 

"It is apparent from this statement of the character of the 



130 EXPORTING TO THE WORLD 

business organization which Americans must compete against 
in foreign markets that this country's organization for export 
trade must be strengthened if its manufacturers and producers 
are to compete on more nearly equal terms in the commerce 
of the world. Obviously, most of the individual American 
exporters, handicapped by dependence upon foreign shipping 
and foreign financial institutions, and forced single-handed to 
oppose united foreign competitors, are at a material disadvan- 
tage. In international trade the competitive conditions have 
been largely in favor of the foreign concerns, particularly 
when opposed by the smaller American exporters. Co-opera- 
tion solely for export business will go far to permit the devel- 
opment of stronger American organizations, and may be par- 
ticularly advantageous to smaller concerns. The need of such 
concerted action is clearer when the character of the export 
trade of the United States is understood. Under normal con- 
ditions about two-thirds of its exports have been foodstuffs 
and materials for use in manufacturing — such commodities as 
grain, flour, meats, cotton, copper, oil, coal, etc. ; and one-third 
of its exports have been manufactured articles ready for use, 
such as machinery of all kinds, electrical goods, automobiles, 
boots and shoes, wearing apparel, cloths, medicines, drugs, 
paints, varnishes, etc. 

"The marketing of these two broad classes of products in 
foreign trade present very different problems. Many food- 
stuffs and materials for manufacture, such as grain, copper, 
cotton, etc., will sell themselves at some price, usually at a 
price broadly established in competitive world markets. De- 
veloping export business in these commodities is compara- 
tively simple. There is often no need of creating a demand. 
With this class of business the problem is greatly one of ob- 
taining a more efficient system of selling, and partly one of 
protecting our producers against combinations of foreign 
buyers. At present, one of the most practicable means for 
obtaining these results is co-operation among American pro- 
ducers. 

"In the case of finished manufactured articles, the problem 
is generally more difficult. In the factory products, both 
staple and special, the manufacturer must often create the 
demand for his particular goods. While it is not to be for- 



COMBINATIONS IN FOREIGN TRADE 131 

gotten that cheapness and quality of product are necessary, 
organization for selling is also essential. 

"To the producer of specialties, however, co-operation in 
export trade does not offer such great advantages as to the 
producer of staples. Absence of standardization is in the way 
of its effective working and the field of foreign markets is far 
more open and free to specialties than to staples. In some 
lines American concerns making specialties have established 
their products in a world-wide way and are ahead of competi- 
tors from other countries. While, therefore, producers of spe- 
cialties have to create their own market, many of them feel 
that they can do this to better advantage individually. Some 
of those who have not yet established themselves in all their 
markets, or who are but beginning their campaigns, favor co- 
operation, but what they wish is co-operation with manufac- 
turers of allied lines rather than with competitors. 

"To the producer of staples, the foreign manufacturer or 
combination making the same line offers the most determined 
competition. To establish the American goods requires strong, 
practical selling campaigns. Not only must the customer be per- 
suaded to prefer the American manufactured article but sales 
must often be supplemented by the establishment of local 
warehouses that will insure a prompt supply and the customer 
must be given ample assurance that he can continue to get the 
same goods year after year. Moreover, this demand must be 
created in distant countries. In face of determined and skill- 
ful opposition from competing foreign manufacturers united 
in powerful combinations, this is a most difficult undertaking. 
It is among American manufacturers of staples, therefore, 
particularly the smaller concerns, that co-operation for export 
business is especially needed. It will permit them to create 
organizations which can compete on more equal terms with 
the organizations of their foreign rivals. They can afford, 
then, to advertise, to study foreign demands and customs, to 
make demonstrations, to open branches, warehouses, and 
stores abroad, to collect credit information, and to extend 
credit, to employ skilled salesmen familiar with foreign mar- 
kets, and to maintain a direct representation of their own 
which will be firmly established and effective in the markets 



132 EXPORTING TO THE WORLD 

to be covered. The expense of such promotion will not be 
excessive when shared by a number of participants. 

"In many lines of manufacture the export commission 
houses and the export merchants are undoubtedly the best 
agencies by which goods can be placed in foreign markets. 
These firms have played a great part in the development of 
American trade in manufactured goods, and their function and 
their value in this respect should not be forgotten or under- 
rated. But to many of the demands of international trade in 
such goods they are inadequate, Frequently such articles re- 
quire highly specialized technical training on the part of sales- 
men. In other cases long and expensive introductory work 
must be done to create a market. Export commission firms 
and export merchants are far less disposed to spend money 
and energy in such work than are the manufacturers whose 
continued prosperity depends upon the creation of markets for 
their goods. The commission house and the export merchant 
handle dozens of different lines of manufactures. Their profits 
come from the total business, and it is the total with which 
they are chiefly concerned. But the manufacturer is inter- 
ested in a single line of products. He concentrates his effort 
on the creation of business for that line, and he is much more 
resolute in the matter than any intermediary who has no 
capital invested in manufacturing plants and equipment. 

"In domestic business, competition, independence, and the 
play of individual forces is the settled policy of this country. 
The law requires that this shall be the condition of business 
here. Abroad the legal conditions are different. In many 
countries combination is permitted and in some it is even 
encouraged. What is equality of opportunity for manufac- 
turers within this country, therefore, becomes inequality and 
disadvantage for them when they undertake to export to other 
countries.' , 

How Combinations Are 
Made Under Webb Law 

The chief problem in combining under the Webb act seems 
to be that of obtaining the centralization with the least loss 
of individuality and independence on the part of those con- 
cerns entering the association. This apparently is a problem 



COMBINATIONS IN FOREIGN TRADE 133 

which must be left to the solution of individual industries and 
groups. 

Mr. Gilbert H. Montague, of the New York Bar, who was 
counsel to the special committee of the American Manufac- 
turers Export Association in support of the Webb law, in 
analyzing the measure in a brochure for the Guaranty Trust 
Company of New York City, gives the following example of 
how various concerns met these problems: 

''Such export trade as there was, in a certain American in- 
dustry," says Mr. Montague, "had been confined to several 
large concerns represented abroad by branch houses or export 
houses. 

"Upon the return of normal conditions, it seemed certain 
that general over-production would exist through the industry 
at home, while abroad an active and constant demand would, 
in all probability, be resumed in various markets at prices, 
and for grades on which many concerns in the industry would 
then be glad to quote. The handful of concerns already sell- 
ing abroad were as yet unwilling to alter their existing re- 
lations with branch houses and export houses. They would, 
however, make with any joint selling organization compris- 
ing the rest of the industry, satisfactory arrangements regard- 
ing prices to foreign buyers, or terms of export sales, or 
credits to foreign customers, or grades of export products, 
or other subjects of common interest. A man experienced in 
the industry, and acquainted with conditions in foreign mar- 
kets, could be engaged for a reasonable salary and a fair 
bonus arrangement as general manager of a joint selling or- 
ganization. With him, and with one or two banks familiar 
with conditions in foreign markets, plans had been worked 
out for financing the sales abroad, and for financing the pur- 
chases at home, and for a schedule of credits for sales abroad 
and for purchases at home, and for opening sales branches be- 
ginning sales promotion in several selected foreign markets. 
From this, and from an estimate of prospective operating ex- 
penses, a budget had been worked out of the probable finan- 
cial requirements of the joint selling organization. With the 
banking accommodation that seemed reasonably assured, and 
with an ample margin of safey, an initial investment of $200,- 
000 seemed sufficient to start the organization. 



134 EXPORTING TO THE WORLD 

How Corporation 
Was Organized 

"A corporation was finally determined upon to be organized 
under the laws of one of the eastern states, with the purposes 
carefully limited to those permitted by the Webb-Pomerene 
Law, and with capital stock consisting of 5,000 preferred 
shares and 5,000 common shares, the preferred shares to be 
eight per cent per annum, cumulative, par value $100 each, to 
be all issued at organization, on which $40 per share was to 
be paid up and $60 per share was to be subject to call, the 
common shares to be without nominal or par value, to be is- 
sued only as bonus, share for share, with subscriptions for 
preferred shares, and only to concerns actually participating 
in the joint selling arrangement. No participating concern 
was to have more than one vote, and each was to be repre- 
sented upon the Board of Directors, whose powers, when not 
in session, were to be vested in a small executive Committee. 

"Each participating concern was to execute an agreement 
with the corporation, constituting the latter exclusive agent 
of the former, for the sale of the former's entire export product 
during the life of the agreement. This export product was to 
amount to a specified percentage of the participating concern's 
output, consisting of specified grades and quantities. The 
corporation was to fix the prices at which it should sell the 
export product, and bill and collect therefor in its own name. 
The participating concern was to standardize, label, mark, 
pack, and ship its export product as directed by the corpo- 
ration, and was to protect the latter in respect of all claims 
by purchasers. The participating concern was to bear all 
freight and other charges to the seaboard, but the corpora- 
tion was to bear all freight and other charges beyond the sea- 
board, and all selling expenses of the corporation. For export 
products which the 'participating concern furnished the cor- 
poration, the participating concern was to be credited upon 
the basis of prices arrived at by one of a variety of ways. 
Thus, the corporation might take from each participating con- 
cern an option for a specified period, upon specified grades and 
quantities upon specified prices. Again, whenever the cor- 
poration desired to quote upon a prospective order, it might 
communicate with each participating concern, and fill the 



COMBINATIONS IN FOREIGN TRADE 135 

order from which every participating concern named the lowest 
price. As compensation for its services, the corporation was 
to receive and retain the excess of the export price at which 
it should sell such product over and above the price at which 
it purchased from the participating concern. The corpora- 
tion was to settle with the participating concern for each 
shipment within thirty days, less two per cent discount in ten 
days. Out of the aggregate profits realized on the operations 
of the corporation, the corporation was to retain an amount 
vsufficient to pay cumulative dividends at the rate of eight per 
centum per annum on its preferred shares, and also such 
amount as the Board of Directors should deem proper for 
reserves. Out of any balance remaining the corporation was 
to grant to each participating concern then in good standing 
a rebate in the proportion which the amount of export product 
guaranteed by each participating concern bore to the ag- 
gregate of similar export products guaranteed by all par- 
ticipating concerns. 

Another Example 
of Co-operation 

"Most of the concerns in another American industry had 
had some experience in export trade and had suffered greatly 
from one another's competition in foreign markets. 

"Upon the return of normal conditions it seemed certain that 
export trade would be resumed with a recurrence of the former 
unsatisfactory conditions, in which foreign buyers, as formerly, 
would combine to present a united front against each Ameri- 
can exporter, and by playing one against another would force 
each to underbid the other until as so often had occurred in 
the past, the combined foreign buyers would obtain the prod- 
uct below a fair and reasonable price. Most of the concerns 
in the industry had suffered so much in the past from these 
conditions, and were so fully convinced of the wastes involved 
in their competition with one another in foreign markets, that 
they were ready to co-operate in any reasonable form of single 
joint selling organization. A man who had made his mark as 
foreign sales manager for one of the concerns, and whose in- 
tegrity and impartiality were approved by all, could be en- 
gaged as general manager. Desirable locations in a number 
of foreign markets could be secured simply by taking over 



136 EXPORTING TO THE WORLD 

branches already maintained there by one or another of the 
participating concerns. There was abundant past experience 
from which to plan the office management and sales organiza- 
tion, to work out the details of selling, credits, financing, ship- 
ping, and traffic, and to draw up a budget of probable financial 
requirements for a joint selling organization. 

How This Combination 
Was Incorporated 

"A corporation of $150,000 capitalization, entirely of paid-up 
common stock, was finally determined upon, to be organized 
under the laws of one of the western states, with its purposes 
carefully limited to those permitted by the Webb-Pomerene 
law. Only concerns which should agree to sell their entire 
export output through the corporation were eligible to become 
stockholders; and no concern was to be entitled to more than 
one vote, regardless of the number of shares it might own; 
and no concern or group of concerns was ever to maintain a 
majority interest or dominating control of the corporation. 
To carry out these provisions, every share of stock, excepting 
the qualifying shares, was to be endorsed in blank by the 
stockholders and deposited in trust with stock trustees. Upon 
this stock the corporation was to have a first lien as security 
for the faithful observance and performance by the stock- 
holders of the corporate by-laws and resolutions and of any 
agreements entered into or obligations incurred by the stock- 
holder with respect to the corporation. In event of the stock- 
holder's default in this regard, the Board of Directors could 
tender to the stockholder the book value, not exceeding the 
par value, of his stock, less any indebtedness owing by the 
stockholder to the corporation, and could then cancel his stock, 
and reissue it to the stock trustees, who in turn might sell it 
to concerns eligible to become stockholders. According to the 
by-laws, specified geographical groups of stockholders were 
always to be entitled to specified numbers of directors in the 
Board of Directors and in the Executive Committee. Divi- 
dends were to be limited to seven per centum per annum, and 
surplus earnings were to be retained for reserves, or expended 
in sales promotion in export trade, according as the Board of 
Directors might determine. 



COMBINATIONS IN FOREIGN TRADE 137 

Agreements With 
Participating Concerns 

"Each participating concern was to execute an agreement 
with the corporation, constituting the latter the exclusive 
agent of the former, for the sale of the former's export product 
during the life of the agreement. This export product was to 
consist of specified quota determined from time to time by 
the Board of Directors of the corporation. The corporation 
was to sell the export product at such prices as the corporation 
should be able to obtain, and v/as to allot its orders fairly and 
impartially among the participating concerns, as nearly as 
possible in accordance with quotas determined from time to 
time by the Board of Directors of the corporation. Each par- 
ticipating concern was to accept and execute such orders as 
the corporation should assign to it. The corporation was to 
guarantee all accounts that it should sell, and was to settle 
with each participating concern for each shipment within 
thirty days, and was to retain for its services a commission of 
two and one-half per centum. The agreement between the 
corporation and the participating concern was to provide for 
no rebate upon this condition, and the only refund at any time 
to which the participating concern was to be entitled was in 
the form of dividends upon such stock as the participating 
concern might own in the corporation. 

Another Typical Case 
of a Combination 

"Most of the concerns, in another American industry, had 
for years been selling a substantial part of their output in 
export trade, and had suffered greatly, in the manner above 
described, from combinations of foreign buyers. 

"Much as the industry had suffered from this cause, how- 
ever, certain concerns, whose co-operation was deemed to be 
essential, were known to be adverse to becoming full members 
of any single joint selling organization. Every concern, on the 
other hand, had for years been accustomed to sell its export 
product through one or another agent, whom it had paid, on 
a commission basis, for selling, financing, and effecting deliv- 
eries abroad. 

"A well qualified general manager, and suitable foreign rep- 



138 EXPORTING TO THE WORLD 

resentatives, were readily available for a joint selling organiza- 
tion. The financial requirements of such an organization, also, 
were ascertainable with reasonable accuracy, and were easily 
within the ability of the industry to provide. A corporation 
was accordingly determined upon, to be organized under the 
laws of one of the eastern states with its purposes carefully 
limited to those permitted by the Webb-Pomerene law, and 
with a cash capital of $100,000 to be obtained by the issue of 
partly paid common stock, the balance to be subject to call in 
event of any unexpected increase in the financial requirements 
of the corporation. Only concerns that should agree to sell 
their entire export product through the corporation over a 
specified number of years were to be eligible to become stock- 
holders. 

Methods of Sales 
Distribution 

"Each participating concern was to execute an agreement 
with the corporation, constituting the latter the exclusive 
agent of the former for the sale of the former's entire export 
product during the life of the agreement. This export product 
was to amount to a specified proportion of the participating 
concern's output. The corporation was to sell the export 
product at the best prices that it could obtain, and was to allot 
orders among the participating concerns as nearly as possible 
in proportion to the amount of export product which each had 
guaranteed to the corporation. The participating concern was 
to standardize, label, mark, pack, and ship its export product 
as directed by the corporation, and was to protect the latter in 
respect of all claims by purchasers. The participating concern 
was to bear all freight and other charges to the seaboard, but 
the corporation was to bear all freight and other charges be- 
yond the seaboard, and all expenses of the corporation. For 
such products as the participating concern furnished the cor- 
poration, the participating concern was to be credited upon 
the basis of prices specified in a schedule attached to the agree- 
ment. As compensation for its services, the corporation was 
to receive a commission of three and one-half per centum, and 
to retain the excess of the export price at which it should sell 
such product over and above the price at which it purchased 
from the participating concern. The corporation was to settle 



COMBINATIONS IN FOREIGN TRADE 139 

with the participating concern for each shipment within ten 
days after delivery of shipment at the seaboard, less two per 
cent, discount for cash against bills of lading to the seaboard. 
Out of the aggregate commissions received by the corporation 
the corporation was to retain an amount sufficient to pay divi- 
dends at the rate of seven per centum per annum on its capital 
stock, and also such amount as the Board of Directors should 
deem proper for reserves. Out of any balance remaining, the 
corporation was to grant to each participating concern, then 
in good standing, a rebate in the proportion which the amount 
of export product guaranteed by each participating concern 
bore to the aggregate of similar export products guaranteed 
by all the participating concerns. 

"Traveling in 
Double Harness' 

"This agreement was to be the basis upon which the corpo- 
ration would sell the export product of concerns participating 
as stockholders in the joint selling organization. But some 
concerns, as already has been stated, were known to be ad- 
verse to becoming full members of any single joint selling 
organization. Each of these concerns, however, had for years 
been accustomed to sell its export product through one or an- 
other agent, whom it had paid on a commission basis, for sell- 
ing, financing, and effecting deliveries abroad. Each of these 
concerns, accordingly, was to be invited to make an agency 
agreement with the corporation, similar in all substantial re- 
spects to the agency agreements which it had been accus- 
tomed to make with its former agents. These agreements were 
to contain provisions for their termination, by^ either party, 
upon fairly short notice, so that each party would have a 
prompt way of escape if these agreements should prove un- 
satisfactory. During the life of these agreements, however, 
the concerns entering into them could try out the experiment 
of traveling in double harness with the rest of the industry, 
and if they found the experiment satisfactory, they could then 
all combine, upon a more enduring basis, as stockholders and 
full participating members, in a joint selling organization. 



140 EXPORTING TO THE WORLD 

The Joint Type of 
Organization 

"In the examples of joint selling organizations above de- 
scribed it was the organization itself that undertook the work 
of selling abroad. This, however, is not an essential charac- 
teristic of the joint selling type of organization. A joint sell- 
ing organization, having contracted with its members for their 
entire export product, may find it the part of wisdom to con- 
tract then with an export house for the disposal of its export 
product, on commission or on some other satisfactory basis. 
The export house, as shown above, may undertake for the joint 
selling organization the actual work of selling, financing, and 
effecting deliveries of the export product controlled by the 
joint selling organization. For the export house, this arrange- 
ment might be attractive because it would result in the con- 
solidation of a number of separate, small, indifferent accounts 
into a single, substantial, desirable account. For the partici- 
pating concerns combining in the joint selling organization, 
the arrangement might be attractive, because it would promise 
profit with the minimum of risk and overhead expense, and 
w r ould assure better terms, from the export house, than each 
of the participating concerns could possibly expect. Again, a 
joint selling organization, desiring itself to undertake the work 
of selling abroad, but not on so ambitious a scale as in the 
examples above described, might decide to sell through local 
dealers, or through a traveler, in the mode characteristic of 
those types of selling organization. Thus it might save all 
the wastes of competition, and all the economies of combina- 
tion, which savings and economies the joint type of organiza- 
tion makes possible, and at the same time might obtain all the 
advantages which other types of selling organization afford in 
many foreign markets. 

"A joint selling organization, having contracted for the en- 
tire export product of its participating concerns, is therefore 
unfettered in its choice of methods for selling in export trade, 
and is in position to market abroad through branch houses, or 
export houses, or local dealers, or travelers, through any type 
of selling organization whatsoever." 



COMBINATIONS IN FOREIGN TRADE 141 



Individual Methods 
Govern Organization 



<v 



"Nor should it be forgotten that joint selling organizations 
like other types of Export Associations, may combine with one 
another into larger and more comprehensive joint selling 
organizations, whenever greater economies, or more efficiency, 
or any other advantages, to themselves and to the concerns 
participating in them, appear to lie in that direction," says 
Mr. Montague. 

"And should combinations of this character appear desirable, 
but obstacles be presented in the loss of individuality and in- 
dependence which a larger joint selling organization might 
involve, it should not be forgotten that single joint selling 
organizations, instead of combining into a larger selling 
organization, may simply enter into agreements with one 
another regarding allotment of export orders, or prices to 
foreign buyers, or terms of export sales, or credits to foreign 
customers, or grades of export products, or allocation of for- 
eign markets, or pooling of foreign business, or apportion- 
ment of output for export or division of sales territory abroad, 
or common selling agencies for export, or joint representation 
in export trade, or the like. 

"Nor, finally, should it be forgotten, that the humblest 
American exporter, whether he sells through an export house, 
or local dealers, or a traveler, or only by mail order, may 
nevertheless, deal at arm's length with the largest joint selling 
organization, or may come to terms with it, if the terms are 
satisfactory to both parties, upon any agreement of the char- 
acter above described, or, if he prefer, may go his own gait 
in export trade, with absolute assurance that the Federal 
Trade Commission will protect him against any act of his 
big competitor that constitutes unfair competition or restraint 
upon his export trade." 



Chapter XI 

HOW TO QUOTE PRICES 

"One price to all" poor policy — System of discounts should 
be flexible quoting prices in american currency quo- 
tation symbols must not be confused meaning of differ- 
ENT symbols — Method of computing c. i. f. prices — Terms 
upon which goods are sold 

There are two things that the American manufacturer must 
not do in quoting prices to foreign customers. One is, he 
must not make one price for any and all merchants engaged 
in the re-sale of goods in foreign countries. He must be care- 
ful to draw the line between the importer, wholesaler and re- 
tailer in a foreign country as well as the export merchant at 
home. If he is going to do business with the exporter at one 
of our American ports the latter alone should know the manu- 
facturer's export price, and so on down the line. The mer- 
chant who buys from the manufacturer is entitled to protection. 
The price at which he buys from the manufacturer should not 
be revealed to the merchant to whom he sells the goods. 

The second thing that the manufacturer must not do is en- 
deavor to dictate the retail price of an article to be sold in a 
foreign country. When it is remembered that the importer 
must face a number of additional charges at the other end 
such as import duties, dock dues, commissions to custom- 
house brokers as well as risks due to a fluctuating currency 
in a foreign country to which the goods are shipped the jus- 
tice of this policy will be recognized. It is evident that the 
imposition of an arbitrary retail price beyond which the mer- 
chant may not go would be highly impracticable. 

System of Discounts 
Should Be Flexible 

A flexible system of discounts is usually necessary for the 

142 



HOW TO QUOTE PRICES 143 

purpose of quoting different prices to various merchants in- 
volved in the re-sale of goods. These discounts range as high 
as 40 per cent and as low as 10 per cent. They are generally 
determined by the character of the business in which the cus- 
tomer is engaged. Importers, wholesalers and retailers who 
ask quotations from manufacturers are subject to varying dis- 
counts. The quantity of goods purchased during the year, and 
the territory in which the customer is located, may also de- 
termine the amount of the discount. With reference to ter- 
ritory it must be remembered that it is more costly to develop 
business in sparsely settled regions of the world than it is in 
the more thickly settled and prosperous sections. The manu- 
facturer who sells goods in London may quote a lower price 
to the British merchant than to the Siberian or the merchant 
from Punta Arenas. 

Quoting Prices in 
American Currency 

If a customer desires to be quoted in the currency of his 
own country the manufacturer should do so, only he 
must be careful that due allowance is made in the rate of ex- 
change at which the foreign, money is converted into American 
dollars. Also, if the foreign customer requests that the value of 
the invoice be collected in the currency of his country or in 
some foreign well-known currency, such as the mark, franc or 
pound sterling, the manufacturer should do so but with the 
understanding that the value of the invoice will be converted 
into the currency desired at the rate of exchange prevailing in 
New York or in some other city when the shipment is made so 
that he may obtain the exact equivalent in American dollars.- 

Quotations Should 
Be Understandable 

When the manufacturer quotes a price on a certain article 
the customer at the other end should know exactly what he 
means. There should be no room for doubt. Neither should 
the customer be compelled to write or cable for further in- 
formation. This not only means delay, but causes unneces- 
sary expense. In order to avoid this the manufacturer should 
be sure that the following points are written down in black 
and white on quotation forms which he may distribute : 



144 EXPORTING TO THE WORLD 

(a) Description of merchandise; (b) Quotation of prices 
in an understandable manner; (c) Name of city where goods 
are to be delivered: (d) The kind of packing, and charges 
made for special kinds; (e) Date of shipment; (f) Liabilities 
that manufacturer will assume ; (g) Liabilities that customer 
will assume; (h) Liability of manufacturer due to delays be- 
yond his control ; (i) Form of marine insurance to be taken 
out; (j) Terms of Payment; (k) Routing of shipment; (1) 
Methods of shipment in absence of specific instructions. 

Quotation Symbols 
Must Not Be Confused 

There is much confusion in the use of symbols for quoting 
prices to foreign customers. For instance, the symbol "F. 
O. B." means "free on board" and when used in export trade 
it should mean "free on board vessel," that is to say, all 
charges involved in getting the goods on board the ship are 
to be paid by the shipper. In quoting "F. O. B. Factory" or 
"F. O. B. New York," however, manufacturers generally mean 
that the goods will be placed free on railroad cars or inland 
freight charges are to be paid to New York, but all expenses 
in hauling the goods from the railroad cars and getting them 
on board the steamer must be borne by the customer. It is 
necessary, therefore, when quoting "F. O. B." that the ship- 
per qualify the symbol with additional information. The 
buyer must know whether "F. O. B. Factory" means that 
he must pay the freight from the factory to the port of ship- 
ment, whether "F. O. B. New York" means that he must pay 
lighterage and other incidentals involved in getting the goods 
on the steamer, or whether "F. O. B. Vessel" means that he 
is relieved from these additional expenses. The latter quota- 
tion is the proper one to use in export trade as it is difficult 
for a foreign buyer to calculate the freight charges from fac- 
tory to port of shipment and other incidentals involved in 
getting the freight into the hold of the steamer. The shipper 
should do this for him. 

"F. A. S." (free alongside) is another expression that needs 
explaining. An "F. O. B. Vessel" quotation includes all 
charges of loading goods on steamer. An "F. A. S. Vessel" 
quotation includes all charges except those involved in hoist- 



HOW TO QUOTE PRICES 145 

ing goods of an extremely heavy character into the steamer. 
When extra charges for loading heavy goods into the steamer 
are imminent, the shipper makes an "F. A. S. Vessel" quotas 
tion unless he is willing to pay the extra charges himself. 
Failure to make this distinction in quoting prices may lead to 
financial loss. 

C. I. F. Quotation 
In Export Trade 

The symbol "C. I. F." means cost, insurance and freight. 
In quoting prices on a "C. I. F." basis the manufacturer 
agrees to pay all charges involved in getting the goods on 
board the steamer, the marine insurance premium, and the 
freight. All other charges such as consular fees, etc., not in- 
cluded in the "C. I. F." quotation must be borne by the cus- 
tomer. In quoting "C. I. F." the manufacturer should inform 
the customer as to the kind of marine insurance to be taken 
out, and in time of war whether it involves a war risk clause- 
To the foreign customer a "C. I. F." quotation is the most 
attractive. Knowing what goods will cost him at the port of 
destination he can easily calculate what the charges at the 
home port will amount to. Knowing approximately what the 
total cost will be he can then quote a definite price to his cus- 
tomer without delay. 

In quoting "C. I. F." however, the shipper assumes the 
following risks : 

Loss from fluctuation of charges involved in placing goods 
on ship. 

Loss from fluctuation of rates in marine insurance. 
Loss from fluctuation of ocean freight rates. 

How Merchants 
Profit on C. I. F. 

On the other hand, however, a sudden drop of freight or in- 
surance rates may mean an increased profit to the shipper. 
As a matter of fact, some American exporters make their "C. 
I. F." quotations so close that they usually depend on the 
changing freight and insurance rates to drop in their favor. 
Their profits are obtained from the difference at which they 



146 EXPORTING TO THE WORLD 

booked the freight and marine insurance and the final price 
that was paid. Inasmuch as there is considerable risk in- 
volved in quoting "C. I. F." prices it is necessary to limit such 
quotations to a certain time only, as a protection to the shipper. 
In order to expedite the closing of deals on a "C. I. F." basis 
the cable is usually resorted to, and an answer by the same 
method is generally requested. When quoting by mail on a 
"C.I.F." basis an immediate reply by letter or by cable is asked. 

The shipper who quotes a "C. I. F." price is responsible for 
the following: 

Delivery to shipping point. 

Delivery of goods on vessel and payment of freight charges 
and insurance premium. 

It should be noted that the shipper is not responsible for 
the delivery of the goods to destination. If the goods arrive in 
a damaged condition or are lost the customer must pay for 
them, nevertheless. He must obtain satisfaction from the car- 
rier or the insurance company, not the manufacturer. 

Liability in Quoting 
C. I. F. and F. O. B. 

There is greater liability in quoting an F.O.B. point of ship- 
ment than a C. I. F. destination as appears from an article in 
the Bulletin of The American Manufacturers' Association by 
A. M. Fisher, in which he says: 

"The world, or at least part of it, is talking of efficiency. 
The C.I. F.quotation is advantageous and desirable because it 
is more efficient than the usual quotation F. O. B. shipping 
point. There are several reasons. 

"It is well to understand the difference between the C. I. F. 
price and the F.O.B. price and also to understand the difference 

A decision of interest to manufacturers and exporters was recently rendered 
by a Canadian court relating to the commercial expression, "F. O. B." The 
court made it a ruling as to the significance of the term. The court held that 
the term "Free on Board" means that the seller, at his expense, places his goods 
on the car or vessel which is to carry them from the point specified, and that 
the buyer takes the risk onwards ; at the same time the goods must, at destina- 
tion be in conformity with conditions of sale or they may be legally rejected. 
Further, it is necessary to distinguish delivery from acceptance ; for said the court : 
"The carrier is the agent of the purchaser, but his mandate is limited to the 
transportation of the goods. The question to decide is whether it was the thing 
sold that was carried from the point of shipment. If the vendor has correctly 
delivered the thing sold, the buyer becomes the proprietor immediately. If he 
delivers something else — for instance if he has sold goods of first quality and 
delivers goods of second quality — there is no delivery of the thing sold. The 
buyer can refuse them only when they arrive at their destination." 



HOW TO QUOTE PRICES 147 

as to risks. A C.I.F. price quoted for a foreign port, includes 
the cost of the goods F.O.B steamer, the marine insurance 
charges and the steamer transportation charges, to the foreign 
port in accordance with the terms of the bills of lading. An 
F.O.B. price is understood to be a price at point of sail, unless 
stipulated otherwise. By stipulation it may, of course, be 
effective at any point nominated. 

"C. I. F. London and F. O. B. London are two very different 
things, as far as risk is concerned. The F. O. B. quotation, 
as a rule includes all of the risks of the C. I. F. quotation, and 
in addition covers other risks. A quotation F. O. B. New 
York as opposed to a quotation C. I. F. London, on a ship- 
ment destined to London, will, as a rule, in practice, involve 
more risks than the C. I. F. quotation. 

"With a C.I.F. price no liability is involved beyond the cost 
of the goods and the prepayment of the insurance and freight 
charges. These prepayments are not mandatory however, if 
the amounts are allowed to be deducted. With the C. I. F. 
quotation damage or loss after shipment does not accrue in 
any way against the shipper save on proof of negligence, 
which, of course, is not voided. 

"With the F. O. B. price all liabilities are with the shipper 
until delivery is made in accordance with the quotation stipu- 
lation. If the stipulation covers delivery at a foreign port the 
risk is considerable. If it covers delivery at point of ship- 
ment it practically amounts to the same thing as a C. I. F. 
price in view of the usual practice of the steamship companies 
and insurance companies to require prepayment of charges. 

"The elements of the C.I.F. price will fairly be covered by 
jhe following: 

"Cost: The price of the goods F. O. B. steamer, including 
initial factory price, rail carriage to port of shipment, truck- 
ing or lighterage to steamer, derrick charges or lifting into 
steamer if extra heavy or bulky, charges due to special haz- 
ards, probable storage charges, at port of shipment, draw- 
back, if any, consular charges, and petties and postage. 

"Insurance : The premium charge covering a nominated 
period of time, perhaps both before and after the voyage. 

"Freight: All steamer charges covering shipments to destina- 
tion in accordance with the terms of the bill of lading and the 



148 EXPORTING TO THE WORLD 

customary rules of the outward port as to the interpretation 
put upon the terms of the bill of lading. 

"I have said that the C. I. F. price is more efficient than 
F.O.B. price made at the lading port, as is usually done. This, 
you will readily understand when you consider the condition 
at the foreign port and also the logic as to the seller's obligations. 

"As to cost: The foreign buyer, if quoted at the factory, has 
no means of knowing the cost of rail or domestic carriage. If 
quoted F. O. B. cars port of shipment the foreign buyer has no 
means, except perhaps some bitter experiences, which enable 
him to know or judge as to the charges for such matters as 
trucking, lighterage, derrick or lifting hazards, storage, 
drawback, consular requirements, to say nothing of petties 
and postage. 

"As to insurance: He has no means of knowing the insur- 
ance rates or the premium amounts owing to a lack of knowl- 
edge of other elements. 

"As to freight : He is, as a rule, unable to obtain a quotation 
of an outward freight rate at an inward port; that is, a steam- 
ship quotation from New York will not be given in Mel- 
bourne, but will be referred to New York. This is a general 
practice of the steamship companies. They publish no tariffs 
as do our domestic common carriers. Also, manufacturers 
frequently make serious errors in stating the gross weight, 
net weight, legal weight, and the cubic measurement of their 
products. This, of course, is an essential piece of infor- 
mation in figuring laid down costs in foreign markets. In 
many cases the American manufacturers give no informa- 
tion related to this important matter, although they believe 
themselves to be making serious efforts toward a development 
of their export trade. It has come within my experience to see 
errors of over 100 per cent, as to weights and measurements, 
and substantial differences were frequent enough to inspire 
profanity. It is a practical waste of time to make quotations 
of any sort unless some idea> within safe limits, is given as to 
weights and measurements. 

"You will appreciate from the foregoing that the foreign 
buyer is at a distinct disadvantage unless prices are quoted 
C.I.F. owing to conditions beyond his control. The result is 
that their interests are more often in what may be termed 
'heavy' or 'standard* lines, rather than what may be termed 



HOW TO QUOTE PRICES 149 

'specialty' lines. But few of the members of this association 
are offering what I would term the 'heavy* lines ; most of you 
are offering specialties. As a rule the heavy lines are quoted 
C.I.F., and, I believe, it is true that most of the specialty lines 
are quoted F.O.B lading port by the manufacturer. The sell- 
ers, being yourselves, are able to get all of the information 
required for the making of C.I.F. quotations promptly and 
with certainty and little risk. If the elements are combined 
into the C.I.F. price, the buyer, who is really representing your 
interests, has his time conserved. His risks are materially 
reduced and, incidentally, he is willing to work on lesser unir 
profit, thereby enhancing the volume of business placed with 
you." 

When the manufacturer quotes "C. & F." he means cost 
and freight, the insurance being eliminated. 

Quoting "C. A. F." should be avoided as it does not mean 
"Cost and Freight" in foreign countries. Instead, it is sub- 
ject to the French interpretation of "cost, assurance and 
freight," which is the equivalent to "C. I. F." as "assurance" 
is the French word for "insurance." 

In some countries the expense involved in exchange is in- 
cluded in the quotation of prices. The American manufac- 
turer who wishes to include exchange in quoting prices to a 
customer in Australia or in South Africa where the exchange 
is usually figured in should use the following symbol: "C. I. 
F. & E." which means "cost, insurance, freight and exchange." 
"C. I. F. I. & E." means that interest is added, while "C. I. 
F. & C." means that commission is to be included. 

Method of Computing 
"C. I. F." Prices 

In computing "C. I. F." prices the manufacturer must 
know: 

The approximate cost of a given weight of goods delivered 
on board the steamer at the port of shipment. 

The cubic measurements and gross weights of packages. 

The approximate ocean freight rate to be paid. 

To make up the "C. I. F." cost of a certain shipment of 
goods the manufacturer must : 

Compute the railroad freight, cartage, and other charges 
incurred in placing the goods on board the steamer. 

Calculate the ocean freight that is to be paid. 



150 EXPORTING TO THE WORLD 

Include the marine insurance. 

If the shipment involves a hundred gross of a certain article 
it will not be difficult to quote a price per gross "C. I. F." 

Quotations Acceptable 
to the Customers 

There are certain foreign markets in which business may- 
only be obtained by quoting prices delivered at the customer's 
warehouses. The Germans, who have made a study of export 
technique as thoroughly as any people in the world, have been 
able to meet such conditions. In some markets, however, cus- 
tomers are able to handle merchandise more favorably when 
quotations are F.O.B. port of shipment or C.I.F. port of arrival. 
The Germans, always looking for opportunities to develop and 
retain their trade, have met these peculiarities in a manner 
satisfactory to the people they were doing business with. 
Quoting prices in a manner acceptable for the customer repre- 
sents only one of the little things that the Germans have gone 
out of the way to accomplish in order to obtain their great 
foreign trade. 

The necessity of making intelligent quotations to foreign 
customers is paramount. This is illustrated in a Bureau of 
Foreign and Domestic Commerce report on "Markets for Agri- 
cultural Implements and Machinery in Argentina" by Frank 
H. von Motz, which says: 

"Manufacturers who want to enter the Argentine or any 
other foreign market should arrange to quote prices for their 
product, properly boxed for export shipment, and delivered 
F. A. S. New York City. No single thing leads to so much 
trouble, as the quoting of prices F. O. B. cars at factory, F. 
O. B. cars in New York City, or in any other place. The for- 
eign merchant wants to know what the goods he intends pur- 
chasing are going to cost him F. A. S. in New York Harbor, 
so he can figure the landed cost at his port. 

"In normal times, prior to the war in Europe, Buenos Aires 
importers of implements generally figured that 25 per cent. 
added to the cost F.A.S in New York Harbor would allow 
enough margin to pay all costs incident to putting the goods 
in a warehouse in one of the three port cities in Argentina. 
"In other words, the price F.A.S. in New York Harbor, with 
25 per cent, added, represents the landed cost in an Argentine 
port. These figures seem somewhat high, but as the majority 



HOW TO QUOTE PRICES 151 

of the importing houses figure their landed costs in that way 
it is best to use the figures they do. To the landed cost 56 
per cent, is added to find the list price, which is also the retail 
price. To dealers a discount of 15 per cent, is given, with an 
additional discount of 5 per cent, for cash in 30 days. 

"In the case of repairs a different method is used. With the 
exception of a few very necessary repairs, the nature of which 
causes them to wear out very rapidly and on which special 
prices are given, the American manufacturers 5 list price is 
multiplied by five, and the result is the Argentine list price in 
paper money* In other words, a repair listed at $1 in the 
American manufacturer's catalogue is listed at $5.00 Argen- 
tine paper in the Argentine importers' catalogue. An Argen- 
tine paper dollar is worth $0.4246 American money, therefore 
the Argentine list price is $2.12 American money. 

"Dealers get a discount of 15 per cent., with an additional 
discount of 5 per cent, for cash in 30 days. As most American 
manufacturers allow a discount from list of 50 per cent., or 
even more, a repair listed in the American catalogue at $1 can 
be placed in a warehouse by the Argentine importer at a price 
which does not exceed $0.63. If the repair sold at retail, the 
selling price is $2.12 ; if at wholesale, the selling price is $1.71, 
assuming that advantage is taken of a cash discount." 

Terms Upon Which 
Goods Are \Sold 

In the United States "net" means payment without dis- 
count. 

In England "terms cash" means payment within one or two 
days. 

In the same country "ready cash" means payment within 
five or ten days. 

The British also offer a discount of from two to two and 
one-half per cent for cash paid within five to ten days of de- 
livery of goods. 

The Germans ordinarily give thirty days with two per cent 
discount or 90 days net. 

In Germany and France the practice has been to include a 
90 day note with the invoice to customers who returned them 
to the sellers properly accepted. This is common also in 
Canada. Such method is practicable where an open credit 
business is conducted. 



152 EXPORTING TO THE WORLD 

Reforms Urged in Making 
Standardised Quotations 

Before closing this chapter it might be well to call attention 
to the movement initiated by the leading export organizations 
of the country, such as the National Foreign Trade Council, the 
American Manufacturers' Export Association, the American Im- 
porters' and Exporters' Association and others, to standardize 
and clarify export quotations so as to prevent misunderstand- 
ings as to their true meaning. It is common knowledge among 
exporters in this country that confusion arising from the mis- 
understanding and misinterpretation of quotations has been 
the cause of the loss of thousands of dollars annually both to 
buyer and seller. It is the purpose of the above mentioned 
organizations to bring about a reform in this important detail 
so as to simplify it to that point where even the least experi- 
enced merchants engaging in foreign trade may easily 
master it. 

At a meeting in December, 1919, the organizations men- 
tioned gathered at a conference in New York, and a recom- 
mendation by the National Association of Manufacturers call- 
ing for the abandonment of all the abbreviated terms in favor 
of writing the words out in full was adopted. The action 
taken at this conference, however, can only be in the nature 
of a recommendation where there are so many engaged in the 
trade throughout the country. Reliance is placed upon the 
trade organizations to conduct a campaign of education look- 
ing to the adoption of the proposed changes. 

New Methods of Making 
Quotations Are Adopted 

The export quotations finally passed upon and adopted were 
as follows: 

F. O. B. (Named Point). 

1. When the prices quoted applies only at shipping point, 
and the seller merely undertakes to load the goods on or in 
cars or lighters furnished by the railroad company serving 
the industry, or most conveniently located to the industry, 
without other designation as to routing, the proper term is: 



HOW TO QUOTE PRICES 153 

"F. O. B. (named point)". (F. O. B. cars, mills, works 
and factories all have the same meaning and obligation.) 
Under the quotation : 

(a) Seller must (1) place goods on or in cars or lighters, (2) 
secure railroad bill of lading, (3) be responsible for loss 
and, or damage until goods have been placed in or on cars 
or lighters at shipping point, and clean bill of lading has 
been furnished by the railroad company. 

(b) Buyer must (1) be responsible for loss and, or damage in- 
curred thereafter, (2) pay all transportation charges, in- 
cluding taxes, if any, (3) handle all subsequent movement 
of the goods. 

F. .O. B. (Named Point). 

Freight prepaid to (named seaboard point). 
2. When the seller quotes a price including transportation 
charges to the port of exportation without assuming responsi- 
bility for the goods, after obtaining a clean bill of lading at 
point of origin, the proper term is : 

"F. O. B. (named point) freight prepaid to (named point 
on the seaboard)." 
Under this quotation: 

(a) Seller must (1) place goods on or in cars or lighters, (2) 
secure bill of lading, (3) pay freight to named port, (4) 
be responsible for loss and, or damage until goods have 
been placed in or on cars or lighters at shipping point, 
and clean bill of lading has been furnished by the railroad 
company. 

(b) Buyer must (1) be responsible for loss and, or damage in- 
curred thereafter, (2) handle all subsequent movement of 
the goods, (3) unload goods from cars, (4) transport 
goods to vessel, (5) pay all demurrage or storage charges, 
(6) arrange for storage in warehouse or on wharf where 
necessary. 

F. O. B. (Named Point) Freight Allowed. 

3. Where the seller wishes to quote a price, from which 
the buyer may deduct the cost of transportation to a given 
point, without the seller assuming responsibility for the goods 
after obtaining a clean bill of lading at point of origin, the 
proper term is: 



154 EXPORTING TO THE WORLD 

"E. O. B. (named point) Freight Allowed To (named 
point on the seaboard)." 
Under this quotation : 

(a) Seller must (1) place goods on or in cars or lighters, (2) 
secure railroad bill of lading, (3) be responsible for loss 
and, or damage until goods have been placed in or on 
cars or lighters at shipping point, and clean bill of lading 
has been furnished by the railroad company. 

(b) Buyer must (1) be responsible for loss and, or damage in- 
curred thereafter, (2) pay all transportation charges (buy- 
er is then entitled to deduct from the amount of the in- 
voice the freight paid from shipping point to named port), 
(3) handle all subsequent movement of the goods, (4) 
unload goods from cars, (5) transport goods to vessel, 
(0) pay all demurrage charges and, or storage, (7) ar- 
range for storage in warehouse or on wharf where 
necessary. 

F. O. B. Cars (Named Point on Seaboard). 

4. The seller may desire to quote a price covering the 
transportation of the goods to seaboard, assuming responsi- 
bility for loss and, or damage up to that point. In this case 
the proper term is: 

"F. O. B. cars (named point on seaboard)." 
Under this quotation: 

(a) Seller must (1) place goods on or in cars, (2) secure rail- 
road bill of lading, (3) pay all freight charges from point 
of shipment to port on seaboard, (4) be responsible for 
loss and, or damage until goods have arrived in or on cars 
at the named port. 

(b) Buyer must (1) be responsible for loss and, or damage in- 
curred thereafter, (2) unload goods from cars, (3) handle 
all subsequent movement of the goods, (4) transport 
goods to vessel, (5) pay all demurrage charges and, or 
storage, (6) arrange for storage in warehouse or on wharf 
where necessary. 

F. O. B. Cars (Named Port), L. C. L. 

5. It may be that the goods, on which a price is quoted 
covering the transportation of the goods to the seaboard, con- 
stitute less than a carload lot. In this case the proper term is : 



HOW TO QUOTE PRICES 155 

"F. O. B. cars (named port), L. C. L." 
Under this quotation: 
(a) Seller must (1) deliver goods to the initial carrier, (2)1 
secure railroad bill of lading, (3) pay all freight charges 
from point of shipment to port on seaboard, (4) be re- 
sponsible for loss and, or damage until goods have arrived 
on cars at the named port. 
' (b) Buyer must (1) be responsible for loss and, or damage in- 
curred thereafter, (2) handle all subsequent movements 
of the goods, (3) accept goods from the carrier, (4) trans- 
port goods to the vessel, (5) pay all demurrage charges 
and, or storage, (6) arrange for storage in warehouse or 
on wharf where necessary. 

F. O. B. Cars (Named Port), Lighterage Free. 

6. Seller may quote a price which will include the expense 
of transportation of the goods by rail to the seaboard, includ- 
ing lighterage. In this case the proper term is : 

"F. O. B. cars (named port), lighterage free." 
Under this quotation : 

(a) Seller must (1) place goods on (or) in cars, (2) secure 
railroad bill of lading, (3) pay all transportation charges 
to, including lighterage at, the port named, (4) be re- 
sponsible for loss and (or) damage until goods have arrived 
on cars at the named port. 

(b) Buyer must (1) be responsible for loss and (or) damage 
thereafter, (2) handle all subsequent movement of the 
goods, (3) take out the insurance necessary to the safety 
of the goods after arrival on the cars, (4) pay the costs 
of hoisting goods into vessel where weight of goods is 
too great for ship's tackle, (5) pay all demurrage and 
other charges, except lighterage charges. 

F. A. S. Vessel (Named Port). 

7. The seller may desire to quote a price covering delivery 
of the goods alongside overseas vessel and within reach of its 
loading tackle. In this case the proper term is : 

"F. A. S. Vessel (named port)." 
Under this quotation: 
(a) Seller must (1) transport goods to seaboard, (2) store 



156 EXPORTING TO THE WORLD 

goods in warehouse or on wharf if necessary, unless buy- 
er's obligation includes provision of shipping facilities, 
(3) place goods alongside vessel, either on a lighter or on 
the wharf, (4) be responsible for loss and (or) damage 
until goods have been delivered alongside the ship. 
(b) Buyer must (1) be responsible for loss and (or) damage 
thereafter, (2) handle all subsequent movement of the 
goods, (3) pay cost of hoisting goods into vessel where 
weight of goods is too great for ship's tackle. 

F. O. B. Vessel (Named Port). 

8. The seller may desire to quote a price covering all ex- 
penses up to and including delivery of the goods upon the 
overseas vessel at a named port. In this case the proper 
term is: 

"F. O. B. Vessel (named port)." 

("F. O. B. named port" has the same meaning in the best 
practice, but should be avoided altogether to prevent misun- 
derstandings.) 

Under this quotation: 

(a) Seller must (1) place goods actually on board the vessel 
and to meet all, in placing goods on the vessel, charges 
incurred thereby, (2) be responsible for all loss and (or) 
damage until goods have been placed on board the vessel. 

(b) Buyer must (1) be responsible for loss and (or) damage 
thereafter, (2) handle all subsequent movement of the 
goods. 

C. and F. (Named Foreign Port). 

9. The seller may be ready to go further than the delivery 
of his goods upon the overseas vessel and be willing to pay 
transportation to a foreign point of delivery. In this case the 
proper term is: 

"C. and F. (named foreign port)." 
Under this quotation: 
(a) Seller must (1) make freight contract and pay transpor- 
tation charges sufficient to carry goods to agreed destina- 
tion, (2) deliver to buyer or his agent proper bills of 
lading to the agreed destination, (3) be responsible for 
loss and (or) damage until goods have been delivered 
alongside the ship, and clean ocean bill of lading obtained. 



HOW TO QUOTE PRICES 157 

(Seller is not responsible for delivery of goods at desti- 
nation.) 
^b) Buyer must (1) be responsible for loss and (or) damage 
thereafter and must take out all necessary insurance, (2) 
pay costs of discharge, lighterage and landing at foreign 
port of destination in accordance with bill of lading 
clauses, (3) pay foreign customs duties and wharfage 
charges, (4) handle all subsequent movement of the goods. 

C. I. F. (Named Foreign Port). 

10. The seller may desire to quote a price covering the 
cost of the goods, the marine insurance on the goods, and all 
transportation charges to the foreign point of delivery. In 
this case the proper term is: 

"C. I. F. (named foreign port). 

Under this quotation: 

(a) Seller must (1) make freight contract and pay freight 
charges sufficient to carry goods to agreed destination, 
(2) take out and pay for necessary marine insurance for 
buyer's account, (3) be responsible for loss and. or, damage 
until goods have been delivered alongside the ship, and 
clean ocean bill of lading and insurance policy have been 
delivered to the buyer or his agent (seller is not responsi- 
ble for the delivery of goods at destination nor for pay- 
ment by the underwriters of insurance claim), (4) seller 
to provide war risk insurance when necessary for buyer's 
account. 

(b) Buyer must (1) be responsible for loss and, or, damage 
thereafter except as covered by insurance and must make 
all claims to which he may be entitled under the insur- 
ance directly on the underwriters, (2) pay costs of dis- 
charge, lighterage and landing at foreign port of destina- 
nation, (3) pay foreign customs duties and wharfage 
charges. 

Shippers are recommended to clearly understand the pro- 
visions of their insurance protection on all foreign sales, irre- 
spective of the general terms used thereon. In almost all 
cases it should be possible, when making shipments by 
steamer, to obtain insurance cover, giving full protection from 
primary shipping point to designated seaport delivery and on 
foreign port of delivery, as ordinary marine insurance under 
F. P. A. conditions, i. e., free of particular average, gives no 



158 EXPORTING TO THE WORLD 

protection against deterioration and (or) damage to merchan- 
dise while in transit, when caused by the recognized hazards 
attending such risks. Shippers should endeavor in all cases 
to obtain insurance under W. P. A., i. e., with particular aver- 
age, when in excess of the customary franchise of 3 per cent. 
to 5 per cent. Under such form of insurance underwriters will 
be called upon to pay claims for damages when these exceed 
the stipulated franchise. 

Emphasizes Necessity 
of Set Terms 

The necessity of set terms in quoting prices is clearly em- 
phasized by John F. Fowler in "The Americas," a publication 
of the National City Bank of New York City, who says : 

"In sales c. i. f. to a port the buyer often pretends that he 
has purchased at that port ; and this quibble is a common trick 
to shirk the goods if the market has turned adversely. 

"The distinction between a sale 'delivered at destination* 
and a sale 'c. i. f. to the port' is sharp and clear to both the 
experienced seller and buyer. But the ignorance on this point 
is amazing, among our American traders, and when laxity in 
practice has been tolerated, by allowing the foreign buyer to 
imagine or infer that he is dealing on the basis of 'quote de- 
livered at' his port, the exporter is breeding trouble for him- 
self, arising from the contingencies of voyage (which belong 
absolutely to the buyer), if anything happens beyond the risks 
covered by the bill of lading and insurance. Many such buy- 
ers throw upon the seller the consequences of deterioration in 
perishable goods, perhaps from the delay (arising from mis- 
hap) en route, and for which the seller never contemplated 
any responsibility. 

"Again, say a sale has been made for shipment a month or 
two later, and space for the cargo is immediately engaged with 
the steamship line, but some mishap delays the boat and un- 
avoidably she cannot load strictly on time. Perhaps, weltering 
weather in summer, or a blizzard in winter, delays the factory 
or railway or local steamboat; or an ice-bound harbor, or a 
strike somewhere, retards the shipment for a week or fort- 
night. The sale was made in all good faith, relying upon usual 
facilities which generally operate on time, but something un- 
controllable transpires, between sales and shipment the market 



HOW TO QUOTE PRICES 159 

has fallen, which fact the customer is sure to know, but he 
will likely await arrival of the goods to reject; them upon his 
unhappy seller, or else exact an extortionate allowance. This 
is bad enough in the case of staple commodities, but if ma- 
chinery or other goods not easy of sale, the exporter is certain 
to suffer heavily. 

Quoting in any way except a "c. i. f." basis often works a 
hardship on a customer who lives in a country where ocean 
freight rates are constantly fluctuating. In these markets it 
is hard to do business unless the importer knows exactly what 
the goods are to cost him landed at the port, and he is unable 
to determine these costs unless he is quoted "c. i. f." 

The disadvantages of quoting in any manner except on a "c. i. f." basis in. 
the Ceylon market is told by Ralph M. Odell, who reported to the Bureau of 
Foreign and Domestic Commerce on "Cotton Goods in Celyon." He says in part: 

"In Celyon as in other markets of the world, the importer stated that the 
practice of .American manufacturers and exporters in quoting goods f. o. b. New 
York instead of c. i. f. the port of destination made it very hard to do business. It 
would doubtless be difficult for the American exporter to make firm offers on a 
c. i. f. basis in view of the constant fluctuations in freight rates, but it is even more 
difficult for the importer in Celyon to ascertain rates of freight outward from New 
York. Inasmuch as present transportation charges are equal from eight to ten per 
cent, of the value of the goods, the importer is afraid to take chances, particularly 
as the margin of profit in cotton goods is very small. When prices are quoted f. o» 

b. New York, he does not know and has no means of ascertaining without cabling 
to the exporter, the rate of freight to be paid. 

"It would certainly facilitate American trade if the exporter would quote prices 

c. L f. Colombo with a stipulation that they were subject to cable confirmation. 
Freight rates and war risk insurance on shipments from Europe are changing almost 
as frequently as the rates from New York but in spite of this fact all English and 
Continental cotton goods are still being sold c. i. f. Colombo. I explained to the 
importers- the difficulties which American exporters meet in conforming to the 
practice, and while they appreciate these difficulties, they maintain that our trade 
would be greatly facilitated if we could overcome them and quote a price on goods 
delivered in the harbor of Colombo." 



Chapter XII 

FOREIGN CREDITS 

Human nature same the world over — Why manufacturers 
refuse to extend credit overseas hlstory of credit in for- 
EIGN business — Credit information not difficult to ob- 
tain — What is necessary in credit information — Long 
credits not necessary in export trade — How to collect 

OVERDUE ACCOUNTS IN FOREIGN FIELD. 

All the crooks and "dead beats" in the world are not to 
be found in regions outside of the United States. Neither 
are all the honest folks concentrated in this country. Yet 
the novice in export trade upon receiving an inquiry or an 
order from a merchant in a foreign country generally demands 
cash in advance before he permits the goods to leave his 
hands. He has formed the opinion that foreigners are not 
to be trusted. There is another kind of a novice in the ex- 
port trade, too. He is the exporter who become^ so enthusias- 
tic over receiving his first order from some merchant in India 
or in South Africa that he immediately makes the shipment 
without consulting the credit information sources which are 
available. The shipment reaches its destination but the re- 
mittance never comes ; and the novice is greatly disappointed. 

Human nature is very much the same the world over. Busi- 
ness is transacted along the same basic principles. There are 
good and bad accounts in foreign countries. There are good 
and bad accounts in the United States. Business cannot be 
transacted without credit, however. The world's greatest export- 
ing nations have developed the markets of the world by extending 
credit. American manufacturers and exporters have extended 
credit. The pioneers will tell the novice that fewer losses 
from bad accounts have been recorded against foreign cus- 
tomers than against domestic buyers. There are still many 
American manufacturers, however, who have not learned that 

160 



FOREIGN CREDITS 161 

risks beyond the American boundary lines are just as safe as 
those within our borders. 

Why Manufacturers Refuse 
to Extend Credit Overseas 

There are probably two reasons why American manufac- 
turers refuse to extend credit to prospective customers in 
foreign countries. One is that they are ignorant that there are 
available in this country many agencies for the obtaining of 
sufficient reliable credit information regarding foreign cus- 
tomers, and the other is that American manufacturers are not 
equipped to handle this kind of business. They do not wish 
to assume the additional burden of looking up credit informa- 
tion, and other risks involved in shipping goods to a foreign 
country, and in the collection of the account. Added to this 
is the necessity of obtaining a speedy return in the invest- 
ment involved in the factory. 

History of Credit 
vi Foreign Business 



Before proceeding with the methods by which an American 
manufacturer may be able to obtain reliable credit informa- 
tion and finance shipments without the necessity of tying up 
capital the reader should have a general idea regarding the 
growth and development of credit in the commercial relations 
between nations. 

In Special Agent Series, No. 62, of the United States Bu- 
reau of Foreign and Domestic Commerce, Mr. Archibald J. 
Wolfe, Commercial Agent for the Department of Commerce 
and Labor gives this interesting bit of light on the beginning 
of credit relations between exporters in Europe and importers 
in foreign markets. 

"In the early history of commercial relations between the 
great exporting nations and the countries which are forced to 
import the bulk of their manufactured goods, and therefore 
from the principal 'export markets,' the financing of export 
shipments was a comparatively simple matter," says Mr. 
Wolfe. "The European exporter maintained branches of his 
own within the sphere of his activity in the export field. He 



162 EXPORTING TO THE WORLD 

supplied the goods, the foreign or local branch received them 
and distributed them among the local dealers or consumers. 
When the latter were able to pay, the distributing house was 
in a position to forward the proceeds to the parent house. 

"The next step in the development of the export markets 
was the rise of independent importers abroad, but these were 
also dependent upon the receipt of proceeds from their cus- 
tomers before being able to settle with the European houses 
which supplied them with the goods. The mode of payment 
on the part of the local customers, however, depended upon 
the purchasing power of the population, and that in its turn 
hinged upon the yield of harvest, and the prices realized 
abroad for native produce. 

System of Barter 
is Dying Out 

"The inevitable progress of economic development has 
brought about certain changes in the relations between ex- 
porters, importers, and native producers in the export mar- 
kets. Excepting in certain sections of Africa and in the South 
Sea Islands, the native producer no longer barters his produce 
against his demand for foreign manufacturers or provisions, 
and the relation between harvests and the purchasing power 
is less visible on the surface, but none the less it is very real 
In Guatemala, Venezuela, and Brazil, for instance, this inter- 
dependence of purchasing power and the price of coffee in the 
world markets is very clearly observable. 

Tt is impossible, of course, to adjust automatically the sup- 
ply of manufactured imports to the purchasing power of the 
country. Yet anyone familiar with conditions in the export 
markets notices the feeling of hesitancy in ordering goods which 
pervades the entire commerce of these markets just before the 
result of the harvest is reliably known. 

"Originally, all this uncertainty, the risk of overstocking, 
the inability to gauge the paying capacity of the local trade, 
were burdens upon the shoulders of the European exporter. 
The distributing house abroad was his own branch establish- 
ment. Later the independent importer had to bear the risk 
of being unable to dispose of his stock. His customers, as the 
result of a bad harvest, might fail to fulfill their obligations 



FOREIGN CREDITS 163 

toward him. He had to have credit, because his ability to pay 
for his goods depended upon the payments of his customers. 

"The European importers, therefore, granted him open 
credit. .This means that the shipments from Europe were 
debited against the importer, leaving him a considerable 
amount of latitude in settling. This latitude was generally 
the subject of special agreements. 

"The credit in this manner is elastic, inasmuch as the time 
of the settlement by the importer is dependent upon the time 
when he receives payments from his customers. Open credit 
was an absolute necessity at a period of the export business 
when the shipments from Europe had to be balanced against 
shipments of foreign produce. It was impossible to either 
provide an absolute equivalent between shipments of manu- 
factured goods from Europe and shipments of a product such 
as coffee to Europe, or to assign any definite time for the 
return shipment. 

"When the importers commenced to settle their indebted- 
ness to European creditors by remittances of money, an ar- 
gument in favor of open credit was the desire on the part of 
the debtors to remit when the 'exchange' was favorable. At 
this stage it may be remarked that the currency reforms in 
many export markets have to a great extent eliminated this 
factor. 

Absolute Confidence 
is Necessary 

"One of the essential conditions of this open credit trading 
was absolute confidence on the part of the exporter in the 
importer. Originally, the importing house was the exporter's 
own branch establishment. Later, European exporters ex- 
tended these confidential relations to houses of strictly Eu- 
ropean nationality, British or Germans located in the export 
field. Competition and the search for wider markets forced 
the European exporters to penetrate beyond the chain of im- 
porters along the coasts and to take up dealings with native 
importers. China, and to some extent Japan, are the only 
countries at the present time where every link between the 
exporter in Europe and the ultimate consumer still remains — 
the importer at the foreign port, the jobber, the wholesale 
distributor in the interior, and the retail dealer. 



1C4 EXPORTING TO THE WORLD 

"In place of the small group of importers oversea, many of 
whom were blood relatives or friends of the exporters and 
whose financial standing was an open book to the latter, the 
exporter deals now with a large number of strangers, whose 
commercial status may be an uncertain quantity. This situa- 
tion brings about the creation of settlement by means of 
drafts. Each individual transaction is documentarily attested 
by means of a draft ; the latter is accepted by the debtor ; the 
credit granted by the exporter ceases on the day when the 
draft matures. 

Banks Now a 
Factor in Trade 

"At this stage of the development of the export trade the 
banks appear as an important factor in the credit business. 
The bill of exchange becomes the foremost credit instrument 
of foreign trade. The improvement in the stability of foreign 
exchange and the organization of a network of oversea banks 
were the principal causes which contributed to this. 

"The American manufacturers enter the export field as 
important competing factors at a time when their British and 
German rivals and predecessors have begun to reap the fruits 
of a long period of preparation, organization, and adaptation 
to foreign conditions. By sheer excellence of their products, 
the result of unparalleled ingenuity and inventiveness, by their 
manufacturing skill and remarkable enterprise, they invade 
the markets of the world and attain a most enviable position 
as an exporting nation. The vast home market, indeed, still 
engrosses the attention of most American manufacturers. It 
is comparatively a small number among them who have 
studied the foreign markets with an eye to the future as well 
as to the present. Many of them regard the export trade as 
a sideline or as an experiment. The results of this phase in the 
growth of the American export trade are numerous complaints 
from foreign customers. The farsighted manufacturers who 
have built up a world trade are seldom objects of these com- 
plaints, but the novice seems to be bound to pass through this 
period of apprenticeship, until under the expensive tutorship of 
experience he learns to transact his business with the foreigner 
as smoothly as with the home customer." 



FOREIGN CREDITS 165 

Manufacturers Refuse 
to Give Credit 

Mr. Wolfe goes on to cite the most popular criticism di- 
rected against American manufacturers by foreign buyers — 
that of the refusal of the former to grant credit to the latter. 

"It may be admitted here that the demand for credit in the 
export markets is a vital one and that European exporters 
adequately meet this demand/' says Mr. Wolfe. "The Ameri- 
can manufacturers, on the other hand, have been persistently 
blamed for ignoring it. The result of this attitude, it is 
pointed out, is that Americans lose trade to the nations which 
will grant the credit required in the export field. 

" 'Cash against documents' in New York at this period 
comes to be known as the cast-iron rule of many American 
manufacturers. Some, indeed, have listened to the reproaches 
of critics and have shown a tendency to be liberal to foreign 
customers, and as a result have met with financial losses. 
They soon realize that while refusal to grant credit may lead 
to loss of trade, indiscriminate credit granting is sure to lead 
to loss of money." 

Credit Information Is 
Not Difficult to Obtain 

With the growth of the American export trade American 
merchants and manufacturers have recognized the necessity 
of accommodating foreign buyers to some reasonable extent in 
the matter of credit. With the expansion of American banking 
institutions into foreign fields and the development of trade 
associations and other competent agencies the facilities for 
extending credit to foreign merchants have been bettered 
without imposing difficult burdens on those who! extend it. 
A study of a bank's functions in connection with foreign trade, 
and methods of obtaining credit information will soon con- 
vince the beginner that doing business with a foreign cus- 
tomer is not as difficult as it may seem. 

The American manufacturer who sent a form letter to a 
foreign customer in which the latter was asked to answer a 
number of questions regarding his financial standing is well 



166 EXPORTING TO THE WORLD 

known. Needless to say, he was not compelled to wait very- 
long for an answer in which the foreigner called attention to 
his impertinence. An exactly opposite policy was adopted by 
another manufacturer who sent a valuable shipment of goods 
to an unknown customer in Argentina without first investi- 
gating his credit standing. He never obtained payment for 
his goods. 

Means of Obtaining 
Credit Information 

No shrewd manufacturer will ship goods on credit to a 
foreign customer unless he has first made a full investigation 
regarding the merchant's financial standing. Where can he 
obtain this information? Is it reliable information? The 
manufacturer may obtain reports regarding the financial 
standing of a foreign prospect at home, or he may obtain 
them in the field to which he is asked to make a shipment. 

The following sources for obtaining information in the 
domestic field are available to the manufacturer: 

(a) The American mercantile agencies; (b) American 
banks having branches or correspondents in foreign coun- 
tries; (c) Export Trade publications in the United States; 
(d) Foreign Trade associations in the United States; (e) 
Foreign exchange bankers in the United States; (f) Ameri- 
can manufacturers; (g) Credit protection societies. 

Among the foreign sources for obtaining credit reports on 
the standing of customers are the following: 

(a) Banks in the countries where the proposed risk is in 
business; (b) Foreign mercantile agencies; (c) American 
Chambers of Commerce in Foreign countries; (d) American 
manufacturers' traveling salesmen in foreign countries; (e) 
Customers' own references. 

It is possible now to obtain credit reports from almost 
every section of the world where there is business. The two 
large American mercantile agencies years ago recognizing the 
necessity of this function for American! business interests, es- 
tablished branches and correspondents in various sections of 
the world where American business was likely to penetrate. 
American Foreign Trade associations, also, went into the 
foreign field to cooperate with American manufacturers and 



FOREIGN CREDITS 167 

exporters. These organizations established foreign credit bu- 
reaus for the collection of credit data which was available to 
all members. Other foreign trade associations recently or- 
ganized are fast developing this department of their activities 
so that the element of risk in doing business with foreign mer- 
chants may be reduced as much as possible. Correspondents 
have been sent to all sections of the world for the collection 
of this data in the interests of the members of the various 
associations. 

Procedure in 
Obtaining Reports 

One organization goes about the obtaining of credit reports 
in this fashion : It organizes a corps of direct correspondents 
located in nearly every city and town of commercial import- 
ance in every country in the world outside of the United 
States. It endeavors to secure statements from firms in- 
quired about, and when given, to communicate with their 
trade and bank references, at the same time having one or 
more of its own correspondents make independent investiga- 
tions. Where firms refuse to give statements the business 
connections of the firm in the United States or Europe are 
communicated with. The testimony from all sources is 
sent to headquarters from where it is sent to the inquiring 
manufacturer. As the use of the mails frequently means too 
long a delay it has its own cable codes by which the essential 
information may be secured by cable at a minimum expense. 

American banks having foreign branches or correspondents 
are, perhaps, the most reliable sources from which credit in- 
formation may be obtained. It is to their interest that com- 
plete reports on the standing of customers in cities in which 
the American manufacturer may desire to do business, should 
be kept. An American merchant desiring information regard- 
ing the standing of a customer in Rio de Janiero should go 
to the American bank that has a branch or correspondent in 
that city. These banks will furnish the data if they have it 
on file provided they Jbelieve the inquirer will make use of 
their service in the financial transaction involved. If the in- 
formation is lacking on that particular merchant the bank 
can easily obtain it by cabling. Unless the transaction in- 



168 EXPORTING TO THE WORLD 

volves a large sum of money, however, this expensive pro- 
cedure is not usually followed. In ordinary cases a letter will 
do just as well. It may require a month or more but not any 
longer than the time necessary to close a transaction with an 
overseas customer. 

Banks in foreign countries may be addressed direct and 
generally an opinion is sent in reply to the manufacturer's in- 
quiry. These banks generally give brief information, and ad- 
ditional reports are often necessary to supplement the data 
obtained from these sources. By piecing together all other infor- 
mation that has been obtained from various sources the manufac- 
turer should be in a position to intelligently judge of the 
customer's credit standing. 

The manufacturer's credit man should be a subscriber to 
all competent and available mercantile agencies. If one 
agency is unable to furnish the required information perhaps 
the other might. If the information cannot be obtained from 
any agency the bank might be able to furnish it. 

The practice of asking foreign merchants to submit refer- 
ences from other fellow merchants is not generally the best 
method. The latter do not like to be disturbed, and the former 
ordinarily do not like to subject their fellowmen to such obli- 
gations. The manufacturer should take advantage of the 
regular channels — the banks, the established mercantile 
agencies, or his own traveling salesmen abroad — for such 
data. 

What Is Necessary in 
Credit Information 

The foreign customer is always a risk, regardless of the 
competence of the credit reports that the manufacturer may 
receive from the regular sources. Credit reports are merely 
opinions. They are not authentic reports containing a guar- 
antee that the customer will pay when required. Much de- 
pends on judgment — judgment on the part of the manufac- 
turer and his credit man. The latter must Jmow his man, 
how he shall proceed in doing business with h'*m, and how far 
he can trust him for merchandise obtained from the manu- 
facturer. 

The credit man must have the following information so that 
he may intelligently arrive at a decision : 



FOREIGN CREDITS 169 

(a) Customer's general trade reputation ; (b) The approxi- 
mate financial worth of the customer; (c) Whether he is an 
old established business man or a recent arrival in the field ; 
(d) His reputation in meeting foreign drafts ; (e) His reputa- 
tion in meeting bills at home; (f) His general character and 
standing in the community. 

These are only a few of the points that a credit report 
should cover. A good credit report can never contain too much 
information. The experienced manufacturer or exporter deems 
it essential to know the customer's reputation in meeting his 
foreign drafts. If his record in this respect is clean he is gen- 
erally considered to be a good risk. 

The credit man must remember that the foreign credit re- 
port will not be as complete as that one to which he is ac- 
customed at home. Many of the essential details familiar in 
the domestic market such as capital, assets, debts, value of 
merchandise, etc., will be missing. Foreign merchants are 
reluctant to furnish this data. In some countries they regard 
the mere asking as an insult. The Latin American or Chinese 
merchants object to giving out reports of such a personal 
character. But the time is coming when the foreign merchant 
will recognize the necessity and value of making his business 
an open book for the perusal of American manufacturers, just 
as it is done in the domestic field. It must be remembered that 
American merchants had to be educated to this method of 
obtaining credit data. At first they furnished it unwillingly, 
but later when they recognized its value in their business they 
consented to give out complete reports. 

Credit Standards 
Differ Abroad 

Again quoting Mr. Wolfe: "Due to the difference in trade 
organization, the credit man will therefore not measure the 
foreign report to the standard of an average American credit 
report, either in size or in the quantity of definite data. No 
one in India or in Turkey or in many other countries can tell 
accurately what his neighbor is worth, and the neighbor 
won't tell. Some very good foreign customers will as soon 
divulge the combination of their safe to a chance inquirer 
as to state just what they are worth, to whom they owe for 



170 EXPORTING TO THE WORLD 

merchandise, and how much money they have in the bank. 
Therefore, except in commercially well developed countries, 
such as Canada, the Continent of Europe, and the United 
Kingdom, and a few others, a report will be even more of a 
'hearsay' nature than at home. 

"In most foreign countries information regarding a credit 
risk will be the result of inquiry among the rivals of the risk, 
among houses supplying him with goods, among banks, whole- 
sale houses, etc. For this reason it is wise to procure reports 
from more than one source. No one reporter, no one re- 
porting office, will always ascertain all of the ascertainable 
data regarding a. customer. This is not so important when 
the general gist of the report is in itself decisive for a given 
transaction. A report may read: 'X and Co. are one of the 
oldest and most honorable houses on this coast and have 
been in business for upward of 40 years. Their wealth is 
several hundred thousand pounds sterling.' This will fully 
suffice to a credit man considering the advisability of ship- 
ping X and Co. $300 worth of goods. Pages of most de- 
tailed data would not alter the fact. On the other hand, the 
report may read : *Y & Z are a notorious firm of international 
swindlers, warned against frequently by consuls and others/ 
and the matter is settled again. 

"These examples, of course, are extreme, but they tend to 
show that mere size is not the decisive element in a foreign 
credit report. What decides is not the number of words or 
details, but the clearness with which the actual standing of the 
customer is portrayed, enabling the credit man to come to a 
decision." 

Long Credits Are Not 
Necessary in Export Trade 

If one is to believe all the charges directed against the 
American manufacturer in connection with the granting of 
reasonable credit to foreign customers one would be tempted 
to visualize Uncle Sam as the "Shylock" of the export trade 
field. "The American manufacturer demands his pound of 
flesh" is a statement that is becoming very common to our 
ears. Travelers arriving home from foreign countries bring 
back stories to the effect that American merchants are losing 



FOREIGN CREDITS 171 

business because of their refusal to extend liberal credit to 
prospective customers. The newspapers are full of such 
stories. Yet if these individuals who innocently bring back 
these reports would only sit down and study the methods 
employed by other great exporting nations they would readily 
become convinced that this seemingly "distasteful" policy is 
not peculiar to the American manufacturer alone. Other 
countries will not grant credits indiscriminately, but when 
they do offer accommodations it is always with the coopera- 
tion of banks engaged in financing foreign trade, and usually 
when these foreign merchants are playing the role of ex- 
porters with branches in other foreign countries. In direct 
dealings with foreign customers, however, it will fee found 
that the German or British manufacturer is just as reluctant 
in extending credit to an unknown foreign importer as the 
American manufacturer. The latter cannot afford to tie up his 
capital for an unreasonable length of time. He does not do 
it if he can help it. It is generally true that credits of 90 
days are considered satisfactory in foreign trade but credits 
over that period are exceptional, even among foreign inter- 
national traders. 

While it is true that Germany and Great Britain — Germany in 
particular — are accustomed to extend the most liberal credit 
terms to overseas customers it must be remembered that this 
practice has been confined to those countries in which unusu- 
ally longer credits are required than in other sections of the 
world. For instance, trade between Germany and the United 
States has generally been on a cash or short term credit basis. 
The reason for this is obvious. These two countries are 
highly developed, and actual payment for merchandise does 
not depend so much on transitory conditions. In dealing with 
countries whose point of development is still below a satis- 
factory margin, however, it is quite necessary to be more le- 
nient in the matter of payments. 

German exporters have taken these factors into considera- 
tion, and consequently we find in many cases that extremely 
liberal credits have been granted to customers in certain quar- 
ters of the globe such as Latin America, certain parts of Africa 
and the East Indies. 

The customary length of German drafts on over-seas coun- 
tries before the war was as follows: 



172 EXPORTING TO THE WORLD 

South America: 3, 4, 6, 9, and 12' months; most frequently 3 
to 6 months. 

Central America: and West Indies: 4, 6, and 9 months. 

Australia: 30, 60, 90 and 120 days. 

China and Japan : Mostly 3 months ; also 2, 4, and 6 months. 

Dutch East Indies and Straits Settlements: 30, 60, 90, and 
120 days, up to 6 months. 

British India 30, 60, 90, and 120 days. 

South Africa : 60, 90 and 120 days, up to 6 months. 

Northern Africa and Asia Minor : 4 to 9 months. 

It will be noted that length of credit varies with the character 
of the territory in which the importer may be doing business. 1 
Even now, however, as is mentioned elsewhere in this chapter, 
there is a general movement in all quarters for the elimination 
of this long credit evil. In Germany protests have frequently 
been made against a too liberal policy in this respect. British 
exporters are frowning on the idea. The general thought seems 
to be that the customers who are constantly asking for time 
are those who may be less desirable on the books of the export 
merchants. It is doubtful whether this loose policy will be 
renewed unless competition becomes so strong among the 
nations that they will again become reckless in making special 

1 "Generally European houses allow credit of at least six months. If Colom- 
bian merchants could obtain the same terms from the United States this would 
be an important factor in increasing the business between the two countries. It 
is suggested that if the United States merchant cannot grant easier terms it would 
appear to rest with the American banks to afford the necessary facilities in the 
way of discounting drafts, etc. These banks when collecting should grant easy 
terms, because in Colombia payments are not usually very punctual ; this does not 
mean that the acceptance of the draft is not good, but there is considerable lat- 
itude in Colombia in the matter of paying drafts. The intermediaries do not care 
to assume responsibility nor to take the trouble to protect the drafts, as the pro- 
cedure is not so rapid or convenient as in other countries. Moreover as the ma- 
jority of the drafts that reach Colombia from manufacturers are small, the banker 
who collects has more work than a banker in another country and has to charge a 
higher commission. 

"Most of the importations into Bogota are on a credit basis, through the 
medium of commission houses who draw on the customers at 120 or 160 days. 
American manufacturers, with some exceptions, do not care for this kind of 
business and usually demand payment against shipping documents in New York, 
which is not generally acceptable to the merchants of Colombia. The latter are 
required to place the money in New York at the time they order, and manufac- 
turers some times delay months in filling the orders with the result that the money 
loses interest in Colombia, where rates are high. 

"Of late large interests in Manchester England, have been cutting down the 
time granted on sales in Colombia by giving only four months instead of six 
months and upward." — Bureau of Foreign and Domestic Commerce Special Agents 
Series No. 160. 



FOREIGN CREDITS 173 

offers of credit to prospective customers in order to get their 
business. 

The Necessity of Credit 
To the Foreign Buyer 

The problem of credit will always command the most serious 
attention of the exporter because of the varied factors involving 
transactions of this character in dealings with foreign buyers. 
As Mr. W. E. Tarlton, export manager, Brown Shoe Co., said 
at the Fifth National Foreign Trade Convention : 

"I feel that we are all agreed that credit has been one of the 
fundamental necessities in the development of our present, almost 
perfect commercial structure, and if it has been necessary in 
order to mature the commercial life of any nation, it is equally 
necessary to produce like results in all nations. Some of the 
countries that represent today the most lucrative field for Ameri- 
can products have an insufficient home capital for the needs of 
their logical commercial interests and the simultaneous develop- 
ment of their own natural resources. Merchants in such coun- 
tries are compelled to play a most important part. They are of 
necessity forced to place goods with the consumer on credit, due 
to the fact that returns yielded on invested capital from agricul- 
tural enterprises (which, of course, go to make up the principal 
industries of these less developed countries), while liberal, do 
not occur at sufficiently rapidly recurring intervals to permit 
cash transactions. These same merchants or importers are also 
called upon to advance heavily for freight, duty, landing charges, 
and etc., and unless credit is extended, they are not in a position 
to buy freely. In sparsely settled countries these same merchants 
in many instances, are also bankers and as such are hampered at 
certain seasons of the year for ready cash. The long delay in 
securing imported merchandise due to transportation difficulties, 
manufacturing delays, etc., necessitate the importer in these 
countries carrying larger stocks than would be necessary were 
supplies available in shorter time. 

Lack of Stability in 
Exchange a Factor 

"Another unfailing argument in favor of credit in some nations 
is the lack of stability in exchange rates. The seasonable exchange 
fluctuations in some of our Central and South American countries 
are to be seriously reckoned with and are a constant source of 



174 EXPORTING TO THE WORLD 

annoyance. I earnestly look forward, however, to the day when 
some master intellect among our banking friends will offer a 
satisfactory solution to this ever-perplexing problem. 

"Competition is also a much used, possibly abused excuse, espe- 
pecially in the mouths of leaders of industries new in the practice 
of exporting, and is quoted freely as a cause for the extension of 
credit in foreign countries. 

"Credit is and always has been an absolute necessity. Remove 
the principle of credit from our daily commerce and you leave 
only a trifle over $10,000,000,000 of protected currency or cash 
in the coffers of the world, and as daily transactions between 
buyer and seller represent a volume hardly measurable in the 
terms of dollars and cents, you can quickly appreciate that 
business would be so materially curtailed as to completely 
nullify the commercial efforts of the past hundred years or more. 
The safe, sane credit systems and practices now prevalent make 
possible the magnitude of the world commerce which we now 
enjoy. 

Considerations in the 
Formation of Credit Policy 

"I have always liked to feel that there was a certain obligation 
on the part of the business houses to take their place in the game 
as a whole by extending credit to an amount commensurate with 
the volume they were enjoying and the returns or profits they 
seek. 

"Manufacturers anticipating a permanent export business must, 
of course, in the fulness of time, decide upon some definite 
policy regarding the subject of credits. As a rule there are 
three points to consider: 

"(a) Your product, and if perchance, you are producing such 
goods as are non-competitive you are fortunate indeed, for in 
that case you can of course, insist upon such terms and prices 
as you want. If, however you are producing articles that are 
subject to competition you will find yourself face to face with 
the problem of doing as the Romans do. 

"(b) You must consider your market and the requirements 
thereof as to credit. The various markets of the world have 
established rules, some of which have been in existence for 
many generations, and these people will be slow to change from 



FOREIGN CREDITS 175 

these rules simply as an accommodation, as they put it, to Ameri- 
can inflexibility. 

"(c) Your buyer must be reckoned with, and he will, of course, 
consider cash transactions only as a last resort. His first thought 
is whether he is in a position to pay in advance or whether his 
means are such that he must have credit. No truer remark has 
ever been made on this subject than was made by an exporter 
before this convention in New Orleans in 1915, who said: 'The 
question of credit is one of the difficulties with which exporters 
have to deal, but if you want to export at all your credits must 
be handled in the same intelligent way and along lines not funda- 
mentally dissimilar to those employed in dealing with our 
domestic trade/ 

"American exporters have been harangued by writers of vari- 
ous creeds and tongues, even American writers, for their frigidity 
of terms, and in contradistinction thereto mention has been made 
of the liberality of Germany. We, of course, have today our 
ideas as to the extent of Germany's liberalities. England and 
other exporting countries have been extolled and their praises 
sung. We have been told of their philanthropy of their enter- 
prise, of their investments made for pioneering enterprises with 
jo desire for return except as a benefit to their country as a 
whole, but all of this is quite misleading. True enough, in your 
experience as exporters, you will find that in many instances long 
terms have been granted and liberal terms extended by manufac- 
turers in these various countries, but analysis of the situation will 
invariably show that these long terms and liberal credits have been 
extended only after careful investigation and after applying the 
same general rules that should always govern the extension of 
credit of any character. Even our so-called 'American' cash 
terms are quite freely indulged in by our competitors in inter- 
national trade, and more often than otherwise are demanded by 
f hem. Conservatism pervades the mind of every intelligent credit 
grantor, whether he learns it from an American business primer 
or from an English, French or Dutch. The short terms principle 
which, I admit, is desirable by every American manufacturer, is 
fundamentally sound, ideal and, in fact enviable and the time is 
ripe for a forceful attitude toward short terms, especially in lines 
of quick turnover possibilities and commodities. 



176 EXPORTING TO THE WORLD 

America's Future 
Credit Policy 

"Up to the present time it has not been expedient nor neces- 
sary that we should place our goods in foreign fields on long 
terms or under a system of loose credit. In fact, it has not 
been necessary that we sell our goods to foreign countries at all 
except where it could be done on an extremely profitable basis, 
and long terms and profit are not compatible unless they are 
accompanied by a mediator — long prices. Implicit faith in 
American business capacity and ingenuity prompts me to feel 
that we can and will overcome any and all competition, how- 
ever, when once we have found it necessary to do so. The 
manufacturing capacity of the United States has heretofore just 
about equalled our demand, but, of course, we are beginning to 
realize that there will be surplus production so soon as the high 
peak load toward which we have been so fast climbing is reached. 

"That we, as exporters are willing to grant credit is an irre- 
futable fact. One hundred and forty-one representative firms 
were asked the question, 'Are you granting credit to concerns 
located in countries other than our own ?' One hundred and ten 
replied affirmatively, thirty-one only were insisting on cash in 
every instance. Our American firms are as able to extend credit 
or better able, in fact, than any competitor we have. We have 
the financial strength, and when the propitious moment arrives 
and a reasonably substantial basis for credit can be shown, we are 
perfectly ready to extend the necessary credit. Importers of our 
goods, however, must know or be taught, if they do not know, 
that merchandise on credit costs more; that short terms are eco- 
nomical, sound, and safe; that long terms and the pernicious 
abuses of credit which have been so prevalent in some countries 
should be wiped out at this the most opportune time of all history. 

"Up to this time I have not attempted to differentiate between 
the term 'open credit' and 'time acceptances.' Both are credit, one 
extremely hazardous, the other considerably less so. There are, of 
course, sound, honorable business men in every civilized country 
in the world, and I for one, deeply appreciate the truth of this ; 
but these qualities are most loudly extolled by those whose close, 
first-hand knowledge and experience are not represented by many 
years of actual, open-credit relationship with merchants in for- 
eign countries, and I mean it as no reflection upon these mer- 



FOREIGN: CREDITS 177 

chants when I warn against open credits. It is a policy only to 
be dealt with with eyes wide open and after a thoroughly com- 
prehensive and efficient investigation and a compilation of com- 
plete, satisfactory data. 

"Open credit is based solely upon confidence. Confidence is 
the result of one's own or someone else's experience and should 
only be dealt in when one is familiar with the details of such 
experience. 

' Thiere will come times, in the experience of every exporter 
who does any volume of business to speak of, when he must ex- 
tend open credit or lose profitable business, and in many cases, 
under any and all sorts of circumstances, and in most any 
country, some open credit can be extended with no more attend- 
ing dangers than is average with any well organized house, 
even though dealing exclusively with domestic trade. 

"Summarizing, I have attempted to show what credit is — to 
show also that it is vitally essential to the development of big 
business, either domestic or export ; to show that manufacturers 
must decide upon their credit policy; that as a Nation we are 
willing to extend credit and are financially able to do so; that 
we should not extend long terms, but that we should apply to 
the extension of credit to merchants in foreign lands the same 
intelligent rules that have built up the fabric of commercial 
credit in our own country. We need badly further help from our 
enormously large financial institutions. They, at least some of 
them, have had the vision and are bending every effort toward 
promoting the interests of American exporters. We need also 
serious study on the part of our legislatures toward expansion of 
foreign trade interest, but, greater than all these is the need that 
the mist of indifference and business apathy be removed from the 
eyes of our manufacturers that they may not only see the benefits 
that will accrue to thlem as individuals by closer study of this 
vital issue, world commerce, but that they may consider it a duty 
to interject their energies into it so that a nation may become a 
real factor. It is not enough that we buy and sell to one another, 
we must iikewise buy from and sell to other countries, as only 
by so doing can we contribute to the economic growth and ex- 
pansion of the United States. The time is ripe, American goods 
are favorably known in every quarter of the globe. With the 
cessation of hostilities in Europe and the assurance of open seas 
and world wide democracy, with an Amercan merchant marine 



178 EXPORTING TO THE WORLD 

commensurate with the standing of our country opportunities 
will be far in excess of any we have previously had." 

Movement to Discourage 
Use of Long Credits 

With changed conditions brought about by the end of the 
war, and the world settling itself down on a more substantial 
basis there has grown a movement in which bankers, and ex- 
porters, and importers alike from all parts of the world are shar- 
ing a part to discontinue the economically unsound policy 
of extending unreasonable credits. Buyers who have 
been accustomed to obtaining the most favorable terms from 
manufacturers and exporters are already beginning to rec- 
ognize the advantages of doing business on a cash or short term 
basis. Purchases under such conditions usually mean lower 
prices and better discounts. Reliable reports to the effect that 
large numbers of buyers may be found in the principal ports of 
the United States with ready cash for purchases of American 
goods for their foreign clients seem to indicate that a step is 
being taken in this direction. With the development of the 
machinery of financing foreign business, however, the American 
manufacturer can look upon the business of developing trade in 
foreign countries on reasonable credit as involving as little risk 
as at home. 

Export Credit 
Insurance Plan. 

As the necessity of obtaining reliable credit information from 
foreign countries is increasing with the tremendous growth of 
our trade there have been advanced within recent years various 
plans aimed to solve the problems of credit managers in connec- 
tion with foreign business. 

Perhaps, the most substantial plan is that which has been re- 
cently developed in Great Biritain. This plan involves the insur- 
ing of the payment of bills in export transactions. 

There are two export insurance schemes in operation in Great 
Britain: (a) the British Government Export Credit Insurance, 
which is carried on under a department of the Board of Trade 
known as the Exports Credit Department, and (b) a second 
scheme consists of two private companies, the British Trade Cor- 
poration and the Trade Indemnity Co. 



FOREIGN CREDITS 179 

Under the plan of the British Government Export Credit In- 
surance the seller of British merchandise to merchants in the 
new States receives immediately a certain portion of his bill, 
even up to 80 per cent. The whole transaction is carried on 
directly with this branch of the Board of Trade, which has ar- 
ranged with the banks of the United Kingdom, through their 
head offices in London, to scrutinize the shipping documents and 
report in a note as to the reputation of the buyer as well as the 
seller, so far as can be ascertained. The buyer is not given open 
credit, but must pay for the goods in the money of his country 
at the rate of the pound sterling exchange before the goods are 
delivered to him. The banks* in the United Kingdom do not 
handle any of the funds, the whole transaction being carried 
on in the foreign country through the branches of the Govern- 
ment department, the banks acting only as information bureaus. 

The object underlying the project is to help these new States 
organize their foreign trade and at the same time to build up a 
sound British business with these countries. The requirement 
that the goods be paid for in the money of the country of pur- 
chase will, to a large extent, eliminate losses and will build up 
a trade with only such firms as have substantial financial backing. 

Terms Upon Which 
Insurance is given 

The British Government is prepared to consider applications 
for advances up to 80 per cent of the cost of the goods, plus 
freight and insurance, for goods sold to 

Finland : 

The Baltic Provinces (Latvia, Esthonia, and Lithuania) ; 

Poland ; 

Czechoslovakia : 

Jugo-Slava; and 

The areas in Russia to which the scheme for insurance 
against abnormal commercial risks applies; 
subject to the following conditions: 

1. Documents are to be surrendered to the buyers against 
their acceptance of a bill in sterling drawn by the sellers for the 
full amount of the invoices, together with security (see next 
paragraph). The Government will release the drawers from any 
recourse against them for the amount of the advances made. 



180 EXPORTING TO THE WORLD 

2. The purchasers must agree to take up such documents 
against a deposit of currency calculated on the basis of the 
market exchanges, such deposit to be made with an approved 
bank in the country of purchase and to be held as security for 
the due payment of the bills. 

3. When the advance is needed, the relative documents will 
have to be accompanied by a letter of guaranty from an approved 
bank of the country of purchase, stating that the documents will 
be promptly taken up against such deposit of currency and under- 
taking that the amount of such currency shall always be main- 
tained at a figure sufficient to give a margin of 15 per cent, 
over the value of sterling as based upon the exchanges (not 
upon the official exchanges, if any). All applications accom- 
panied by a bankers' guaranty of sterling payment at maturity 
of the bill will receive preferential consideration. 

4. The department will consider proposals for a deposit of 
produce or securities instead of currency. 

5. The advances made by the department will be a first 
charge upon the proceeds of the bills and securities; but, if 
such proceeds are less than the cost, plus freight and insurance, 
the loss represented by the difference will be divided between 
the department and the drawer of the bill in the proportion of 
the advance made to the cost (plus freight and insurance). 

6. The credits are to outstand only for such periods as the 
department may determine in each case at the time of applica- 
tion for the advances. 

7. The Government will settle from time to time the countries 
and goods to which the scheme relates, but advances will not 
be made for the export of raw materials and preferences will 
be given to the finance of goods where the larger part of the 
cost is due to manufacture in this country. 

8. All applications must be passed to the department by the 
bankers of the sellers, whose recommendation must be attached. 

9. After satisfaction of the advance the bill and securities 
will be handed to the seller if payment of the full amount of the 
bill has not been made. 

10. At any time after maturity of the bill or after any default 
the department will be entitled to close a transaction and hand 
over the security held, the seller bearing his proportion, as in- 
dicated above, of any loss incurred. 



FOREIGN CREDITS 181 

11. The conditions set out above may be modified at any 
time in special cases. 

The British Trade 
Corporations Plans 

The British Trade Corporation, on the other hand, has formed 
a subsidiary company which may possibly develop into an under- 
taking of importance to British commerce all over the world. 
The new undertaking is called the Trade Indemnity Co., and its 
subscribed capital, which is entirely owned by the corporation, is 
100,000 pounds, of which 20,000 pounds has been paid up. 

'The object of the new company is to assist British merchants 
and manufacturers in developing overseas business, by insurance/' 
it is explained by a London firm to an American consul. "Policies 
are issued insuring the payment of commercial debts, thus en- 
abling an exporter to increase his present volume of trade with- 
out incurring greater capital responsibilities. Under approved 
conditions the company will advance to the assured the amount 
of its liability in respect of any debt insured, against transfer 
of the debt, and payment of interest on the amount advanced, 
until the net outcome of an estate is ascertained. The company 
grants policies insuring up to two-thirds of a client's whole 
turnover against ultimate loss. Policies are also granted to cover 
a proportion of such losses as may arise should a forced resale 
of goods become necessary in consequence of buyers becoming 
insolvent and thereby unable to take up shipping documents. 
The company likewise grants policies insuring against a propor- 
tion of trader's losses in any one year in excess of an agreed 1 
percentage of loss on turnover to be borne by the assured. The 
company is also prepared to grant policies insuring approved 
accounts up to three-fourths of the amount of a debt. 

"These last-named policies, insuring specific accounts will be 
issued on three different bases. Under policies issued under 
basis A the company will pay to the assured an agreed 
proportion of the net loss after the 'debtor has become 
insolvent and all dividends recovered or ascertained. 
Under basis B the assured will receive within seven 
days after satisfactory proof of insolvency a sum equal 
to 13. 4d. in the pound [$3.24 in each $4.87] on the 
proportion of the debt insured under the policy, in full satisfac- 
tion of the liability of the company ; but the assured, besides re- 



182 EXPORTING TO THE WORLD 

ceiving this certain payment, will be entitled to any dividends 
that may be forthcoming. Under basis C the company will under- 
take to pay to the assured, in the event of the dishonor of any 
duly accepted bill, an agreed proportion of such bill as is covered 
by the policy within a few days of satisfactory proof of such 
dishonor and assignment of the debt to the company. Any 
amount collected by the company from the estate of the defaulter 
in excess of the amount paid by the company, plus interest and 
charges, will be returned to the assured. 

Development Has 
Taken Many Years 

"The development of a basis on which to establish a system of 
insuring trade credits has taken many years. For perhaps a 
century or more the principles of insurance on a mutual basis 
were carried out in the form of sharing or pooling credits. 
This was confined to one or two trades where it was deemed 
necessary for self -protection for a number of merchants to par- 
ticipate in some commercial venture in which the magnitude or 
the dangers were more than usual, but where the prospect of 
profits was also of a nature to encourage the merchant's taking 
the extra hazard. 

"Between twenty and thirty years ago several institutions pro- 
moted schemes for guaranteeing the payment of bills of ex- 
change, but made no discrimination between trade and accommo- 
dation paper. No definite system, however, matured from these 
efforts, and with one or two exceptions the insurance and trust 
companies stopped this class of business entirely. In America a 
certain amount of success followed a scheme based on the 'credit 
ratings' of Dun and Bradstreet, but these ratings books were 
apt to put a material limitation on the granting of credit and 
if anything tended to a restriction of trade. 

"The Germans had a somewhat similar system, based on a Gov- 
ernment information bureau. It was, however, too complicated 
to encourage its general use, and very few availed themselves of 
the scheme, except as regards the export trade— in which, previ- 
ous to 1914, it was being taken up and encouraged by the banking 
houses. In Germany, however, the bankers' readiness to discount 
bills of exchange without recourse to the drawer was largely 
doing away with the necessity of guaranteeing payment of credits. 
This accommodation to the merchant was of great service, as the 



FOREIGN CREDITS 183 

seller was relieved of his liability, and his transactions were 
brought to a cash basis, thus enabling him to increase his turn- 
over on a much smaller capital than would otherwise have been 
possible. In England also it was possible to discount trade bills, 
but this venture was and still is in the hands of foreign bankers. 
"The discounting of insurance of bills of exchange was found 
quite inadequate to meet the requirements of the merchant and 
manufacturer. By far the greater number of credit transactions 
were effected without the use of bills of exchange, being simply 
the allowing by the seller of an open account to the buyer. A 
syndicate of Loyd's underwriters formulated a policy to cover 
this class of risk. It was recognized that with bills of exchange 
a definite "proof of debt" existed, but with open-account trans- 
actions certain difficulties presented themselves. These were 
overcome by granting a somewhat lenient form of policy and 
trusting to the good faith of the assured. 

"The demand for credit insuranoe,with the comparatively simple 
forms, adopted by the underwriters, grew very rapidly. The 
merchant immediately recognized its utility, and although the 
business was conducted without any of the usual methods of 
publicity it became of great service to both the home and the 
foreign trader. It was obvious to them that they could extend 
their trade without increasing their capital. It gave the merchant 
greater confidence in entering foreign markets with which he 
was unacquainted, and in many instances he was enabled to build 
up a trade that would otherwise have been impossible without 
material help from his banker at a cost (represented by a pre- 
mium paid) much less than that necessary for actual bankers' 
assistance. A cautious merchant also benefited by being enabled 
to grant larger credits without disturbing his ideas as to the 
limitation of individual credits and, as more than one merchant 
observed, "without forfeiting a night's rest" by jeopardizing 
his own financial resources. 

"This system of insurance also greatly facilitates the opening of 
new accounts, both home and foreign. The independent sources 
of information possessed by the insuring company, added to re- 
ports obtained by the seller, invariably tends to strengthen the 
confidence necessary for the conducting of commercial inter- 
course between buyer and seller. 



184 EXPORTING TO THE WORLD 

Premiums determined 
By Nature of Risk 

"Many methods of insuring credits have been tried, and the 
conditions of the policies granted have varied materially. The 
insurance of specific accounts is perhaps the most useful and 
most generally adopted at the present time. Under this form of 
policy the applicant must submit the names of the customers 
whose accounts he desires to cover, and furnish the insurance 
company with the approximate amount of credit he proposes to 
grant each customer and the terms of the credit. The premiums 
quoted by the company are based on the merits of the proposal. 
It would be impossible for the company entertaining this class 
of risk to fix a tariff" except on a very broad basis, as it must 
readily be seen that the standing of the customer, the period of 
credit, the country in which the customer is domiciled, and many 
other factors must influence the rate of premium. 

"No hard and fast policy has yet been drawn up, nor is it 
possible to devise a simple form to meet the various needs of 
the commercial community. In specific accounts insurance alone 
three forms of policy are generally used : First, a policy to cover 
bill-of-exchange transactions up to a special turnover; second, a 
similar policy to cover open accounts ; and, third, a policy to 
cover a specific period (usually 12 months) against the event 
of the insolvency of the customer occuring within the agreed 
period. In the third form the policy is issued for an amount 
which the applicant estimates to be the largest figure that will 
be owing by the customer at any one time, and no account is 
taken of the actual turn-over. 

"Until quite recently the proportion of the risk entertained has 
been limited to one-half, but, with more experience to guide 
the underwriting company, this has been extended to three- 
fourths, and there is no reason why ultimately the insurance 
company should not act as the exporter's guide and accept the 
whole 'del credere/ but this would mean a much closer mutual 
understanding than at present exists." 

In 1916 the Associated Chambers of Commerce of Great 
Britain adopted formal resolutions asking for some form of 
insuring foreign credits, but it was then thought that the idea 
would not be practical. British bankers criticised the plan on the 
ground that a commercial bank should not conduct credit insur- 
ance or purchase bills "without recourse," because of the high 



FOREIGN CREDITS 185 

proportion of "mercantile risk" involved with the risk of the 
purely financial and personal credit of buyer and seller in trans- 
actions. This criticism was supported by quite a number of 
bankers whose opinions were asked on the subject. 

Special committees representing various trades appointed by 
the Government's Board of Trade to study after-war problems 
took up the matter of studying the resolutions of the Associated 
Chambers of Commerce with the result that the official reports 
of these committees influenced the semi-government body which 
established the British Trade Corporation, to incorporate an in- 
surance feature in that institution's program. 

In connection with this British effort to assist its exporters by 
establishing some form of credit insurance. "The Americas," the 
publication of the National City Bank of New York City says: 

"Some idea of the probable working of the British plan may 
possibly be obtained from the official recommendations of the 
committees. They asked for a guarantee of specific bills, based 
upon the credit of the foreign consignee. It was particularly 
stated that the British trade corporation should organize a com- 
plete credit survey of foreign countries, obtaining much of its 
information from the commercial banks, which, the committees 
thought, would be willing to keep the corporation informed about 
the credit of foreign firms, inasmuch as its insurance facilities 
would probably assist them in their banking business, if such 
information were kept in confidence. And upon the information 
thus gathered, the corporation ought to be able to found very 
accurate averages of credit experiences, and by varying from the 
average in the case of individual foreign consignees, quote a 
premium on specific bills in case of business with them. The 
committees regarded it as a probable business development that 
British exporters would be able to charge the insurance premiums 
to the customers, offsetting the charge by the reduction in the 
price of the goods which being insured of immediate payment 
would enable them to make. In the course of the report of 
the textile committee it was stated: 

"It has been brought to our notice by several witnesses, though 
we have not been able to obtain any reliable details on the sub- 
ject, that there exists in Germany a form of insurance company 
which is willing, for a commission of about 4 per cent, to guaran- 
tee approved long-dated bills of foreign trade. Thus, for in- 
stance, this German company is said to guarantee to the German 



186 EXPORTING TO THE WORLD 

manufacturers the due payment of bills accepted by Russian 
purchasers. 

"The existence of such a financial institution would, undoubt- 
edly facilitate the granting of credit in the export trade. The 
insurance company would be able, by its agents and branches, to 
have on its books firms in foreign countries to whom they would 
be able to give an insurance credit of a certain amount so that 
the intending purchaser, at the time of his purchase, would be 
able to say that the credit asked for would be guaranteed. The 
endorsement by the insurance company of the bills given would 
make them largely marketable securities, and would, when they 
approach the last six months of maturity bring them as negotia- 
ble instruments within the discounting functions of the ordinary 
joint stock bank. The functions of such an insurance company 
could well be covered by the British Trade Bank. It is a business 
which requires the greatest care and skill, but should be quite 
possible of attainment. The main objections would be that a 
firm of standing asking for credit would probably not be willing 
to consider that they should be guaranteed, because, in fact, the 
cost of the guarantee would fall upon their purchase. We attach 
great importance to the establishment of the finest possible finan- 
cial intelligence department in connection with the proposed 
British Trade Corporation, so that traders in this country and the 
Colonies may not be dependent on competing countries for in- 
formation, which is absolutely essential if credit is to be given 
with reasonable safety." 

London Paper Explains 
Credit Insurance. 

The "London Times" in its issue of Aug. 16, 1919, comment- 
ing upon credit insurance and its bearing upon foreign trade 
gives a very clear explanation of the operation of credit insur- 
ance. It says: 

"Insurance of credit seems promised an important place in 
both oversea and domestic commerce. The way in which it 
would facilitate over-sea commerce may be illustrated by an 
example. An English manufacturer may be offered the busi- 
ness to an importer, say, in Brazil, on the strength of six 
months' credit. He himself knows nothing ajbout the financial 
standing of the firm in Brazil. He would therefore go to an 
English insurance institution which would be in communica- 



FOREIGN CREDITS 187 

tion with a similar institution in Brazil. The Brazilian insti- 
tution would investigate the credit on the spot, and, if it 
found the credit satisfactory, the institution would be expected 
to retain part of the risk and receive a pro rata proportion 
of the premium. The English institution would complete the 
transaction by giving the English manufacturer indemnity 
to the extent of three-fourths of the sums insured. The 
Brazilian exporters could likewise insure their British credits. 

"The Brazilian exporter might have no means of knowing 
the financial standing of the importing house in the United 
Kingdom, but he could cover himself by insuring through a 
British office, which would be in a position of having, or being 
able to secure, accurate information. Precisely the same sort of 
transaction would take place in connection with trade between 
Great Britain and the Scandinavian countries, or, indeed, any 
other countries in the world. 

'-'By such methods as these an intelligence system of an ex- 
tremely valuable character would be gradually evolved for the 
benefit of international trade. The system would be greatly 
strengthened by reason of the fact that all the correspondents 
in supplying information would have a direct, substantial in- 
terest in its accuracy. The development of such a scheme would 
relieve manufacturers of much of the worry they now expe- 
rience in respect of the credits they may give, and it would 
allow them to devote themselves more freely to their principal 
business, which should be the improvement of their production. 
It would not relieve them altogether of thought respecting the 
financing of their business, since they would still be required to 
bear a proportion of the risk. But for this proviso they would 
obviously be encouraged to reckless trading. Many cases are 
known in which merchants have refused to bear even 50 per 
cent of the risk and wanted to insure the whole of the credit. 

"Another example may be given to show the working of 
credit insurances. A has been in the habit of granting mod- 
erate credit by supplying goods to B, a customer domiciled 
at home or abroad. B wishes to increase the credit received 
from A, possibly in consequence of the present higher level of 
values. A feels that, considering B's capital, the larger credit 
is more than he is justified in giving. A has no reason to 
doubt the bona fides or the solvency of B, but, as everyone 
else, he likes to limit his risks. 



188 EXPORTING TO THE WORLD 

"A goes, therefore, to the insurance company, explains the 
position and is at once asked : "Have you contracted to part 
with your goods to B ?" If the answer is '"Yes," then the 
company declines to insure. If the answer is "No," the next 
step is for the company, by various means at its disposal, to 
make inquiries as to B's standing. Assuming the result of these 
inquiries to be satisfactory the company grants an insurance 
for a percentage of the debt, leaving A to carry the balance 
at his own risk. 

"The consequence is that A, assuming a share of the risk, has 
proved that he believes B to be sound. The insurance company, 
through its own inquiries has confirmed A's opinion. The two 
parties consequently have checked each other's information. If 
ever they should prove to have been wrong and B fails then the 
procedure will be for the insurance company to see that the 
claim is a proper one. There are certain traps to avoid. It 
might be that, although A has agreed to bear part of the risk, 
he has not really done so, for there are various means, such 
as holding some secret security or having some set-off against 
the debt by which this state of things could occur. Strict 
clauses are necessary in the policy to insure that A really does 
share part of the risk. Otherwise the safeguard of the double 
opinion referred to above is nullified. 

How Losses 
Are Settled 

"Supposing the loss is found to be in order and is admitted 
by the insurance company, then it must still be borne in mind 
that the company is an insurance office and not a bank. The 
marine underwriter does not pay a total loss in respect of every 
ship which runs ashore. He first sees what, if any, is the pros- 
pect of salvage. He pays the final loss only when ascertained. 
So, too with credit insurance; it is the final loss which is pay- 
able. Obviously there must be finality. It has therefore been 
the practice in the past to settle the loss either six months after 
the default or when the assets have been realized, whichever 
date is the earlier. This procedure is really the same as that fol- 
lowed with all kinds of insurance, and no doubt A's banker 
would finance him, if necessary, in the meantime, on the security 
of the insurance policy. 



FOREIGN CREDITS ISO 

"The foregoing is a brief outline of the foundations on 
which it would seem credit insurance should be based. There are 
many varieties of it — the insurance of bills, of open accounts, 
and of the whole of the firm's debtors — and these call for dif- 
ferent forms of policies and different arrangements. Of 
course, difficulties will have to be faced, but no reasonable 
grounds exist for delay in furthering such a scheme. The 
present time, in addition to the extreme urgency of encour- 
aging export trade, is particularly appropriate for developing 
it, since British banks are now opening branches abroad, and 
it is hoped that the banks will be willing to lend their sup- 
port and even take a direct interest in the promotion of the 
necessary institutions. 

"If credit and debts were known to be ultimately secure, 
that scramble for safety which causes a financial panic would 
certainly be moderated, and possibly prevented altogether. 
Insurance has already done immeasurable good for the com- 
munity, and in this direction of safeguarding credit a bril- 
liant future of public service would seem to be before it." 

Relations Between 
Merchant and Underwriter. 

The "Times" in a subsequent article continued its discussion 
of credit insurance, with particular reference to the relations 
between the merchant and the underwriter: 

"In a recent article which was published describing the 
present conduct and prospects of credit insurance, an example 
was given of a merchant who was asked to extend the 
credit given to another firm, in the shape of goods 
delivered, and approached an insurance company in 
connection with the proposal. The point was made that the 
first question put by the insurance company would be 
whether the firm had contracted to part with the goods, and 
that if the answer were in the affirmative, the company would 
decline to insure the credit. If, however, no such contract 
had been made, then the company would proceed to deal 
with the proposal. 

"As the reason for this line of action is often not fully appre- 
ciated by business firms, it will be useful to explain the prin- 
ciple. The position is somewhat analogous to the procedure 



190 EXPORTING TO THE WORLD 

in marine insurance. It is assumed in the case of a ship 
or goods which it is intended to send by vessel, that when 
the insurance is offered the voyage has not been started. In 
practice, cargo is sometimes insured after a voyage has com- 
menced, but that is because the goods may have arrived 
shortly before the vessel left port and the merchant did not 
expect that the shipment would be included; but in all such 
cases the fact is one of which underwriters expect disclos- 
ures. 

Marine and Credit 
Insurance Practice. 

"When the State war risk's scheme of insurance was in 
operation the government office, as a general rule, would 
not accept the insurance of cargo by vessels which had left 
port, although in the later days of hostilities this attitude was 
modified to the extent that voyages between ports supposed 
to be comparatively safe were occasionally accepted after 
the ship had started. As communication on commercial mat- 
ters during the war was exceedingly difficult and the mer- 
chants were constantly without late news of their goods, 
such belated insurances were frequently offered to under- 
writers and insurance companies. Often, partly because by 
that time an underwriter or insurance co*npany might have 
a full line on the vessel or cargo, higher rates of premium 
had then to be paid. Presumably the decision of the gov- 
ernment authorities not to accept insurances of this kind 
was based on the argument that the proposer might have had 
later information. There was the possibility of superior in- 
formation. For instance, a merchant might have reason to 
believe that a submarine had been operating in the vicinity 
of the ship and so might desire to increase his insurances. 
In any case, the venture had started. 

"So in the case of credit insurance. The time for effecting 
insurance is before the risk commences. The proposer is 
assumed to have no superior knowledge than the insurance 
company to which he submits the risk. All the knowledge 
which he may have at his disposal respecting the standing of 
the customer to whom he is proposing to extend the credit 
should be at the disposal of the insurance company. Also, 
he undertakes to bear a proportion of the risk himself, there- 



FOREIGN CREDITS 191 

by proving his good faith. Once he has undertaken to part 
with the goods, or has parted with them, the risk has started ; 
in the same way as the risk starts in the marine insurance 
when the vessel sails from port. 

"In many trades there are no written contracts, and so the 
time when the manufacturer or merchant parts with his 
goods is the 'vital* moment. In other trades the important 
moment arrives when a contract is signed or a signature is 
placed to a letter accepting an order in which definite terms 
are specified. If he does not approach the insurance com- 
pany before this 'vital' moment — i. e., when the risk com- 
mences — there is a feeling in the underwriter's mind that some 
information or rumor may have reached the proposer which 
may have led him specially to seek protection. The pro- 
poser may thus have some ulterior motive in desiring insur- 
ance which is not known to the insurance company. 

H07V Business Volume 
Affects Premium Rates 

'"The attitude of the proposer for credit insurance should 
be that of a man who is offered a new position and seeks a 
safeguard of insurance to enable him to accept it. It is on 
such lines that a very large business should be possible, to 
the great advantage of British oversea commerce. 

"During the war business in the European countries was 
conducted mainly on a cash basis. There are signs now, with 
a very gradual reversal of commerce to peaceful conditions, 
of credit being frequently asked. British firms must in many 
cases be prepared to give it or let the business go to coun- 
tries where it may be obtained. The position of British firms 
will be very much simplified in granting the desired credit 
by being able to secure the assistance of British insurance 
companies in bearing a large proportion of the risk. 

"The larger the volume of credit insurance transacted the 
lower should be the level of premium's tend. Naturally, in 
cases where the merchants only offer to the underwriters a 
small percentage of their business that gives them particular 
reason for uneasiness. Higher rates are apt to be quoted 
than when the underwriters are offered a large volume of 
business, including risks of varying character." 



192 EXPORTING TO THE WORLD 

Credit Insurance 
in Germany 

The need of further facilities of credits is recognized in Ger- 
many, as the merchants of that country have been working on 
plans along the lines adopted by Great Britain. Dr. Emil Herz- 
felder, director of the Hermes Insurance Bank, which combines 
a limited credit insurance with discounting, says in a recent 
article : 

"The establishment of a separate insurance company is war- 
ranted on the ground of increasing necessity. As a result of the 
recent inflation credit relations have become much more uncer- 
tain, and in some places the amounts of credit have rolled up 
to such huge sums that the striving for the thrusting off of a 
part of the risk upon shoulders more capable of bearing the 
burden is lively. Cases are growing more and more numerous in 
which it is not the creditor but the debtor who requires a guaran- 
tee of a third party. The employment of credit as capital for 
merchants and manufacturers who are efficient but lacking in 
funds, in the rehabilitation of their concerns, obviously seriously 
affected by the war, will open up another sphere of activity to 
the new company in the period of transition and also later on." 

Credit Insurance 
Not New Device 

Certain forms of credit insurance have been in existence not 
only in England and Germany for many years, but in America 
as well. Thus say& "The Americas :" 

"In Germany insurance banking has been carried on by pri- 
vate merchant bankers just as the acceptance by proxy through 
established London houses of world-wide credit for a considera- 
tion gave rise in London to the 'acceptance' as we have just 
begun to know it in this country. These German firms, strongly 
entrenched in Hamburg, are the ones referred to by the British 
committees and their operations are very well known. For a con- 
sideration bearing from one-tenth of one per cent to four per 
cent of the amount involved they would assume the risks of over- 
seas merchandising credits in almost any manner that could be 
asked of them. 

"A German manufacturer or trader, with a transaction pend- 
ing, was able to go to one of these houses and obtain an option 



FOREIGN CREDITS 193 

upon his guarantee of the credits involved at a fixed rate. He 
could go on with the transaction or not, as he saw fit, but 'he 
could figure exactly on the financing of it, because the Hamburg 
insurance banker would give him a rate for guaranteeing the 
paper at once, so that he could rely upon an absolute sale of 
his bill for cash immediately, and figure upon that. Or the in- 
surance banker would offer to discount without recourse, or buy 
his bill outright. If the exporter was willing to Wait till his 
goods reached the purchaser, who would accept them and thus 
eliminate the 'mercantile risk' of a miscarriage of the trade, the 
insurance banker would take his paper, with only the customer's 
liability to become insolvent or shirk his debt, at a much lower 
rate. He would give the German a particularly easy rate if he 
only desired insurance on half the risk and carrying half the 
credit on his own account. He would also insure credit trans- 
actions on "open account" and sometime make a cash 
arrangement in connection with these. The great German com- 
mercial banks have erroneously been credited with giving 
German export business the services as a matter of patriotism. 
They may have taken bills of favored concerns 'without re- 
course,' but they did not give the privileges to ordinary German 
manufacturers. It was the insurance bankers who did this, and 
they charged for it and made a lucrative business. 

Kind of Credit 
Insurance Needed 

"In this country we have had a system of domestic credit in- 
surance which, however, would not serve the purposes for which 
exporting manufacturers now demand the new facilities. Our 
credit-indemnity companies have insured the selling merchant 
against excessive losses from all his transactions, or from a fixed 
aggregate of transactions covering a certain period of time. 
To do this, they commonly make an examination of a merchant's 
records and arrive at an average of his credit experiences. 
They study his line of business and his methods, also his 
customers. They then offer him a contract, with restrictive 
conditions he must live up to in granting credits, by which 
for a certain amount they agree to indemnify him for losses 
running in excess of a certain percentage of his gross busi- 
ness. They thus virtually insure him against excessive losses 



194 EXPORTING TO THE WORLD 

from changes in general economic conditions, etc., rather 
than from the particular losses from specific transactions. 

"What the exporters of England, the United 'States and 
Germany are demanding is an absolute insurance of the col- 
lection in full of specific bills, by a big concern of financial 
weight sufficient to make its guarantee on a bill the equiv- 
alent of a big bank's 'acceptance' of one, as far as negotiability 
is concerned. When a bank 'accepts' a bill, it guarantees to 
future buyers of that bill that it will be paid when due with- 
out question or delay, and thus enable the maker to sell it at 
a prime valuation. The bank, however, 'accepts' only upon 
the understanding that it will have recourse to the maker, 
the man who sold the goods, if the buyer should fail to pay. 
The bank gives a guarantee only to the holder of the bill. 
It will pay him, but it will proceed to collect the money from 
the exporter here if his foreign customer refuses to pay. What 
the exporters who now demand credit insurance desire, is 
that some strong institution will take a small commission and 
guarantee the payment of bills so that they can obtain their 
cash by selling their bills and have no further liability. It 
is a perfectly reasonable wish for carrying the liability upon 
bills during transit and collection limits their ability to obtain 
credit for doing more business. Moreover, it is the rule for 
manufacturers to add, say, two per cent to their prices as a 
margin of guarantee to cover an imaginary or real average 
of loss through bad credits. 

"Almost any one would rather be able to pay one-half of 1 per 
cent, have his credits all guaranteed, and use the 1^2 per cent in 
meeting competition, or increasing the profit. The service of a 
feasible credit insurance would be double ; it would enable manu- 
facturers to trim prices and it would virtually i M to their work- 
ing capital. German manufacturers are now demanding that this 
Government recognize the national aspects of these economic 
features of credit insurance and their recommendations for a 
State bureau to guarantee export bills. 

"The commercial banks of this country and England, which 
are so strongly organized with foreign branches as to be able to 
know the credit of foreign buyers intimately, have often been 
criticized because, on the strength of their foreign credit knowl- 
edge they, do not buy outright, without recourse to the seller, 
and on the credit of the consignee, the bills of exportation, 



FOREIGN CREDITS 195 

charging a reasonable commission for the service. The banks 
have resisted the temptation to take these profits, on the ground 
that they must confine themselves to pure banking risks, and the 
"mercantile risks" — as they are called — of foreign collections are 
not within the realm of commercial banking. In actual foreign 
business the bulk of difficulty in making foreign collection arises 
not from the dishonest refusal of foreign merchants to pay but 
from refusals to accept consignments because of a wide range of 
reasonable misunderstanding between the parties. Busy manu- 
facturers and merchants are not given to careful, detailed des- 
cription in their correspondence. The buyer writes a brief order 
with one idea in his mind; the exporter fills it conscientiously 
with another in his. A few months ago an Argentine manufac- 
turer of bathtubs sent an order to the United States for galvan- 
ized iron sheets. When the sheets arrived at Buenos Aires he 
refused to take them. The whole correspondence was referred 
to a mediary. Both principals it is evident from the records, 
acted in absolutely good faith. The Argentine expected "bright" 
sheets; he received perfect "gray" sheets. At the worst the 
American concern was careless. Both are financially responsible. 
But a bank that would have bought the bill for that shipment 
outright would have been at a loss for it. The variation of these 
miscarriages of commerce is legion. 

"The "problem" of insuring foreign bills will be comprehend- 
ed almost entirely in the question how to fix a premium that will 
fit an average 'mercantile risk.' It can be solved, undoubtedly. 
The British Trade Corporation has arranged with a well-known 
marine insurance company to be its credit-insurance department. 
The marine underwriters of England are the world's most ver- 
satile judges of risks of all kinds. Lloyds will consider any 
kind of risk submitted to them, it is said. 

To Be a Success 
Premium Must Be Law 

"It is entirely feasible to judge of particular "mercantile risks. " 
But to be a success the premium must be low. It will probably 
become highly competitive. If we take up the insurance of 
foreign bills over here there is no doubt that while th? 
insuring institution will write its full guaranty of a bill as bene- 
fiting a buyer of the bill in order to make insured bills freely 
negotiable, it will have a contract giving it recourse against the 



196 EXPORTING TO THE WORLD 

maker in case of palpable errors in business transactions. It 
might require a general bond of the insured, covering a range 
of business. It might require 'acceptance' of the bill in ad- 
vance by a bank, and then insure against the mercantile risks 
only. Or it might employ some practicable system of inspection 
of the goods to see if orders and documents conform exactly to 
specifications. Special laws might be adopted, holding exporters 
to stringent compliance with certain standards when they insure 
transactions. It has even been suggested that some great cor- 
poration should combine express business or forwarding, pack- 
ing, and insurance. This would give it full control over the 
physical merchandise, and enable it to make sure of the mer- 
cantile risks/ 

"It has been said by advocates of this proposed facility for our 
commerce that the establishment of world-wide credit insurance 
in international commerce, either by one or more very large in- 
stitutions, or by groups of smaller companies working closely as 
underwriters do would automatically diminish the mercantile 
risks of trade by forcng both exporters and importers to conform 
absolutely to standards. A general vogue of insurance at fraction- 
al rates would with its economies make it well nigh impossible 
for exporters to export or importers to import without it. A 
record of continuous bad practice on the part of an exporter, 
or many refusals to accept goods, without the very best reason, 
on the part of an importer, would soon result in his being 
classed as a bad risk, with a high premium on his business, or 
exclusion. It would enforce careful handling of exportations 
and discourage captious or dishonest refusals to accept importa- 
tions." 

How to Collect Overdue 
Accounts in Foreign Field 

It should be understood, that the credit man often runs up 
against the situation involved in the collection of a poor ac- 
count in the foreign market. This is natural. It often hap- 
pens that some sort of a collection machinery must be put 
into action to force payment from a customer whose credit 
standing is not of the best. This is a regular thing in the local 
market. Collection agencies thrive on this sort of business. 
It is not difficult for the manufacturer to turn over the col- 



FOREIGN CREDITS 197 

lection of a bad account to one of these agencies — and they 
generally do the work. 

But when there is a bad account to collect in a foreign 
country what must the credit man do about it? If the manu- 
facturer or exporter has a branch office in the foreign country 
where the bad account exists the matter is not so difficult. Col- 
lections will be made just like it is done by other concerns in that 
particular field. But for the manufacturer or exporter who falls 
victim to a foreign customer on an open account proposition 
when he has not the adequate facilities to enforce collection the 
problem of collection becomes a difficult one. 

Foreign Account 
Difficult to Collect 

It is generally more difficult to make collections from 
foreign customers than it is from domestic merchants. The 
distance between seller and buyer gives the latter a sense of 
security. He knows that the seller will find himself in all 
sorts of trouble in endeavoring to effect a collection. 

Sometimes the failure to pay is not the fault of the debtor, 
however. The shipment of goods contrary to instructions 
is a none too rare occurrence among American manufacturers. 
This causes misunderstanding. It may finally be settled after 
long drawn out correspondence. In instances of this kind the 
best thing for the manufacturer to do is to settle the matter 
as smoothly as possible. He should be liberal in a compromise. 
It is the best way out. Where the customer is behind in 
his payments the nature of the indebtedness, the state and 
condition of the debtor, and his locality must be considered. 
The nature of the indebtedness may vary from a small item 
on an open account to a large sum ; it may be merely delay in pay- 
ment, a refusal to pay, or inability to pay, either official (bank- 
ruptcy), or inofficial, or finally plain lack of available funds to 
meet the obligation. 

It oftens happens where the rate of exchange is constantly 
changing from week to week that the foreign merchant awaits 
a favorable opportunity for the settlement of his account. This 
may often cause several weeks of delay, and the manufacturer 
might be tempted to write his customer a letter "dunning" him 
for his money. The manufacturer should be very careful in 
the use of his language in the collection of an account of 



198 EXPORTING TO THE WORLD 

this character. An insulting letter from the manufacturer's 
correspondence department may cause the loss of thousands 
of dollars worth of business for the year. 

There are instances, of course, where it is necessary to coin- 
pel prompt settlement on the part of foreign buyers. Mr. Archi- 
bald J. Wolfe, who compiled a report on foreign credits for 
the Bureau of Foreign and Domestic Commerce explains the 
methods that should be employed in collecting a bad .debt. "A 
bank may be well employed to press a draft to the debtor,"' 
says Mr. Wolfe. "Full details should be submitted to the 
bank at the same time, and a courteous letter should be writ- 
ten also to the debtor. If this fails, the customer is plainly 
an undesirable one. It will be then necessary to weigh on 
the one hand the cost and the probable chances of litigation,, 
and on the other hand the amount of the claim made by the 
delinquent. It may be frequently worth while to agree to the 
unjust claim and communicate the incident to the mercantile 
agencies, confidentially, for the protection of American trade. 
The difficulty may be in some of these cases so delicate that 
the credit man might do well either to intrust his claim to 
a bank in the debtor's city with instructions to handle it 
through its attorney or to turn it over to some such institution 
as the foreign collection bureau maintained by the National 
Association of Manufacturers. 

"In the case of delay due to a temporary embarrassment it is 
necessary to judge each case on its own merits. The wise 
credit man will immediately make a searching inquiry into 
the financial standing of his customer in order to learn 
whether an improvement may be soon looked for. In many 
instances a little patience will retain a faithful and a desirable 
customer temporarily short of funds while in other cases prompt 
and decisive action is vindicated. It all depends on the standing 
of the customer, the thoroughness of financial information, 
and on the degree of security the credit enjoys. 

"Where the debtor is dishonest the creditor, evidently had 
been negligent in granting credit to an undeserving customer. 
Such accounts are the most difficult to collect." 

Collections Should Be 
Made on Their Merits 

In endeavoring to collect a bad account by correspondence 



FOREIGN CREDITS 199 

it has been the custom among some American merchants to 
make pleas for their money on a varied number of grounds. 
Some confess that their funds are low and they need the money ; 
others state that the prices at which their goods were sold 
are so low that it is impossible to extend credit. It is questionable 
whether such methods of obtaining remittances of old accounts 
are productive of good results. It is usually done in the United 
States but such methods have often been condemned by the 
more enlightened members of credit associations. It seems that 
the best argument for demanding settlement of an account is 
that it is due, and that the money rightly belongs to the mer- 
chant who made the accommodation. A letter along these lines 
can easily be written by an experienced correspondent. He can 
use tact and diplomacy — and force, without the necessity of 
admitting into the correspondence a list of weak reasons why 
the foreign customer should pay his bill. Perhaps, the best way 
to remind a foreign buyer of the necessity of meeting his bills 
promptly is to insist on the payment of a regular rate of interest 
from the time of the invoice date until the account is paid. In 
countries where there exist high interest rates this will inspire 
customers to settle their obligations with promptness. 

Claims Against 
Bankrupt Estates 

An attorney having experience in foreign countries or a 
bank having branches in tfte foreign country where the debtor 
resides should always be consulted in the matter of collect- 
ing claims against bankrupt estates. The manufacturer will 
learn that many foreign countries have strict regulations per- 
taining to the filing of claims against insolvent estates within 
a certain time limit, or to representation of foreign claims, 
or to the form in which powers of attorney and proofs of 
claims are to be made out. So many different features enter 
into the claims against bankrupt estates in foreign countries 
that good business judgment dictates that they should not 
be handled direct. The collection bureaus of good standing 
as well as many banks are in a position to handle such claii 
for a nominal fee. 

In most foreign countries it is unnecessary to prove the ac- 
count item for item, where an acceptance or note is sufficient 



200 EXPORTING TO THE WORLD 

evidence of the claim. For this reason it is much more difficult 
to sue on open accounts in most foreign countries. In placing 
drafts in the hands of banks for collection care must be taken 
by the manufacturer that he instruct such institutions to pro- 
tect them within the required legal limit in case of nonpay- 
ment, if there is reason to believe that the drafts will not be 
taken up. A non-protested acceptance in a foreign country 
amounts to nothing more than an evidence of indebtedness. 

American Manufacturers at 
Disadvantage in Suing 

Foreign creditors are at a disadvantage when suing in many 
countries. For this reason they should endeavor to avoid 
litigation if possible. Once getting into the courts the Ameri- 
can manufacturer not only loses money, and time but suffers 
the disadvantage of not being able to present his case ef- 
fectively. Unless it is possible to settle amicably out of 
court, or the claim itself is of sufficient importance, resort to 
litigation as a last recourse is then advisable. 



Chapter XIII 

HANDLING AN ORDER 

Method of handling orders determines manufacturer's 
success — Customer's instructions must be closely fol- 
lowed — Confidence of foreign customer must be won — 
Executive ability in handling orders. 

A manufacturer can either kill or create a splendid export 
business in accordance with the method he adopts in the 
handling of his first order. If the first order is to represent 
the beginning of a lucrative export business the manufacturer 
must devote that time and attention to it that he did when 
he received his first order from a domestic customer. Busi- 
ness is not built up on the first order. It is not the order that 
comes in through the mails or other sources today that counts. 
It is the order of tomorrow or the next day or next month or 
year that is going to determine the manufacturer's success or 
failure in business. If the manufacturer has established a 
fixed policy of not engaging in foreign business then he should 
politely refuse to accept business from foreign quarters. Ex- 
port trade is not meant to satisfy the whim of the moment. 
To be worth while it must be permanent, and to be perman- 
ent it must be intelligently handled. 1 

1 In this country today, scarcely a popular magazine article on the subject of 
winning- foreign markets or "grabbing" the export trade fails to tell a story of 
the painful experience of this or that foreign purchaser of American wares, caused 
by the .American way of looking at the export trade. The story usually runs that 
the foreign buyer had at length decided to risk an order with American manu- 
facturers and that the first shipment of the American goods proved very satis- 
factory. It may be that a second shipment was obtained and proved equally 
satisfactory, but at about this stage the foreign buyer was shocked to receive 
a reply to one of his new orders to the effect that the American manufacturer 
was so busy in supplying the domestic market that he could not bother with the 
foreign order at that time. This, of course, disrupted the business of the foreign 
buyer who promptly announced that this would be his last experience with Amer- 
ican goods and straightway turned to the German manufacturers, from whom 
he knew he could expect more courteous and businesslike treatment. 

Although this story is hackneyed, the fact that nearly every American trav- 
eler who returns from a business trip abroad and who is able to get his articles 
published in the magazines tells a _ story along this line would seem to prove 
that many foreign buyers of American merchandise have had such disagreeable 
experiences with American manufacturers. The American manufacturers have 
had so much activity in the tremendous home market in the United States that 
they have not deemed foreign trade worth working for. When some foreign trade 
has come to them by one chance or another, they have regarded it as lying at 
the very outer edge of their business, and if any part of their trade has had to 
put up with inconveniences and delays it has been this foreign trade. In a year 

201 



202 EXPORTING TO THE WORLD 

A foreign customer, no matter in what section of the globe 
he is living, is entitled to the best possible service that the 
manufacturer can give in a manner consistent with the trou- 
ble and risks involved. The quality of the goods to be sent to 
foreign customers should not be determined by the color or 
race of the person to whom they are going. The Chinese, 
Australian, Mexican, Scandinavian or Islander is just as 
much entitled to serious consideration in the matter of orders 
as the Canadian or Englishman. 

"Here is a man from across the seas who writes asking- 
me to send him a sample order of my goods," a manufacturer 
says. "Here is a chance to develop a foreign business," he 
reasons. "This man has given me an opportunity to make a 
start. He has taken an interest in the things I produce, and 
in the utility of my product. I, on my part, am going to take 
an interest in his order ; I shall see that he gets a square deal 
and that his instructions are closely followed." 

As a result of this manufacturer's foresight the foreign cus- 
tomer receives his samples according to instructions and in 
very good condition. He is pleased with them. He tells his 
friends ,and his friends order from the same house. The 
manufacturer's business grows, and his export trade is as- 
sured, and all because he took his first order seriously. He 
"delivered the goods." 

Customers 9 Instructions 

Must Be Closely Followed ' 

Cases are none too rare where manufacturers have en- 
deavored to prove to a foreign customer that black is white 
and that silk is cotton, etc. This vicious practice enjoyed a 
great popularity during the days of the war in the stampede 
to conquer new commercial markets. Hundreds of American 
salesmen flocked to foreign countries in the quest of the 

when production has been so great that there has been a surplus of merchandise 
foi the American market many an American manufacturer has turned with avidity 
to the export merchants and sought a chance to dispose of his surplus abroad. 
Such, however, was only in incident and was regarded as outside the ordinary 
course of trade. Naturally, when the foreign trade of a particular manufacturing 
establishment has been of this incidental character, it has received only in- 
cidental and scant attention. Now, however, if the American manufacturers are 
going to make a direct effort to capture foreign trade, this attitude saust be changed. 
The foreign customer must receive the same careful consideration that the do- 
mestic customer receives. He must not be disappointed and made to feel that the 
American manufacturer cares litte whether he has his trade or not. Regularity 
in meeting the wishes of the foreign customers is essential. — Miscellaneous Series, 
No. 57 Bureau of Foreign and Domestic Commerce. 



HANDLING AN ORDER 203 

"golden fleece," dragging along with them trunks full of 
samples and catalogues representing American manufactured 
articles. With their stocks running low during the trying- 
days of the war foreign customers purchased right and left 
in great quantities and when actual shipments of orders were 
finally made months later they discovered to their sorrow 
that the goods were not according to sample and that instruc- 
tions had been loosely followed. The majority of these crimes 
must be laid at the doors of concerns new in the export game, 
however, and not at the doors of the pioneers in the business. 
The unfortunate part about it was, nevertheless, that foreign 
customers did not discriminate between good and bad houses 
in the United States but condemned the "Yankee" generally 
for his sharp practices. 

What was the result of this ? Here is an illustration. A well- 
known Chilian merchant who fell victim to some of these 
unscrupulous traders told the author on the day the armistice 
was signed the following: "You can say to some of your 
business men in the United States that I am through with 
them. They have had a fine opportunity to build up a fine 
trade with the Chilian merchants but they have thrown it 
away owing to their methods. We have been forced to buy 
from you because we could buy nowhere else. Now that 
the war is over we shall go back to our friends in Europe. 
Your' merchants have lost a splendid opportunity to establish 
a permanent business here." 

Not long ago a customer from Ecuador ordered a consign- 
ment of suspenders from an American manufacturer. The 
merchant plainly wrote that black suspenders were required. 
Instead of following instructions the manufacturer sent the 
suspenders in assorted colors believing, perhaps, that "they 
were just as good." But he did not reckon with his customer. 
The shipment came back. The manufacturer did not get his 
money. Nearly three months were required to straighten out 
a little matter that could have been intelligently attended to 
in the first place. 

The Ecuador merchant might have had a reason for de- 
siring black suspenders. The American manufacturer might 
have had a reason for sending a shipment in assorted colors. 
He should have given it in a letter accompanying the goods, 
and couched in polite terms, explaining his inability to fill 



204 EXPORTING TO THE WORLD 

the order as had been requested, and asking if the colors he 
was sending would prove satisfactory. This he did not do — 
and he lost the confidence of the customer. 

Quite a contrast is the method employed by a New York 
wizard in the export business which extends to the Orient 
where trade has been developed with Chinese merchants. 
This expert not long ago received an order from a Chinese im- 
porter for electrical parts. As it happened the manufacturer 
was not making any more of the kind desired, but he had 
enough on hand to partially fill the order. Did the wizard 
substitute all the new goods for the old ones and send the 
shipment along to his Chinese customer? He did not. But 
this is how he worked it: He filled as much of the order as he 
could with what he had left of the old stock, and sent samples 
of the new kind along with a letter asking the merchant to 
carefully examine them and if he found them satisfactory to 
communicate with him in New York and the balance of the 
order would be promptly filled. The Chinese merchant was 
satisfied. Those who understand the methods of dealing with 
Chinese merchants will readily agree that the wizard knew 
his business. 

Confidence of Foreign 
Customer Must Be Won 

If there is any doubt in the mind of the manufacturer that 
the order he is about to send to a foreign customer will not 
be satisfactory, or suggest an attempt to "put something 
over" he should by all means hold it until it is possible for 
him to fill it according to instructions or until he has received 
authorization to make whatever changes may be necessary. 
A dissatisfied customer is worse than no customer at all. A 
dissatisfied customer by word of mouth can do- great injury 
to an American manufacturer who consistently endeavors to 
cut sharp corners in his dealing with foreign customers. The 
necessity of strictly adhering to instructions is illustrated in a 
story the author recently heard regarding a shipment of pen- 
cils to an importer in the Far East. The importer had re- 
ceived a shipment of these pencils with the trademark slightly 
blurred. The pencils, themselves, were satisfactory, however, 
and some months later another order specifying exactly the 
same brand was sent in. On the second order the faulty 
printing of the trademark had been corrected and in the course 



HANDLING AN ORDER 205 

of time shipped. When the order reached the importer it 
proved to be unsatisfactory. The original trademark was 
missing. The pencils went back to the factory with the fol- 
lowing note: 

"I am sorry, but I cannot use these pencils. The trade is 
now accustomed to the pencils with the blurred trademark, 
and I wish you would send them to me in that way." The 
factory at home saw the point. The methods of printing the 
trademark on the pencils were slightly rearranged, and to this 
day, the story goes, there is a reason for blurred trademarks 
on a certain kind of pencil in the Far East. 

Liability of Seller 
to Furnish Goods 

Two points should be remembered in handling export orders. 
One is that the seller is bound by the acts of his agent in foreign 
countries as long as the latter does not violate the specific 
instructions given him. The only time when a manufacturer 
may place the responsibility on his agent is when he exceeds 
his authority. If the agent does this, he alone, is responsible. 
Another point to be remembered is that in accepting orders 
from foreign customers the manufacturer or shipper should 
have it specifically written in the contract or agreement that 
he shall not be held responsible for contingencies beyond his 
control. Unless this is written in the contract or agreement 
the courts of the United States or Great Britain will hold him 
for a breach of contract. The manufacturer is bound to ship 
his goods at all costs or suffer the consequences unless he in- 
cludes the clause referred to in his agreement of sale. This 
is not the law in other countries, however. 

The manufacturer must be very careful that the date of the 
bill of lading is in accordance with the actual shipment. 
"Shipment in January" means shipment some time during 
that month and not in February. If the manufacturer is un- 
able to ship his goods on the specified date he should com- 
municate with his customer to obtain authorization to change 
the date. 

Executive Ability in 
Handling of Orders 

The capable handling and the intelligent interpretation of 



206 EXPORTING TO THE WORLD 

export orders rests with the export manager. The business 
may fall or rise in the ratio of the export manager's skill. 
The duties of the export manager in relation to his customers 
abroad cannot be better told perhaps, than in an editorial ap- 
pearing in "The World's Markets" published by R. G. Dun 
and Co. The editorial says : 

"There is scarcely an export executive today who is worthy 
of the name but who has in the past four years overhauled 
his whole system of handling export orders, from their first 
receipt to the final payment. Indeed, there is a constant pro- 
cess of revision. Systems entirely adequate in normal times 
have been made watertight against war time storms — and 
they will remain watertight against the unusual conditions 
which will arise from time to time even in most normal 
periods. 

"Foreign buyers appreciate the change. Nowadays, when 
buyers are in the United States and visiting the factories 
which supply them, the visits are not alone of a social char- 
acter, nor devoted merely to trips through the factory to see 
the latest laboratory triumphs and automatic machinery. In- 
stead, can be seen, from San Francisco to Portland, Maine, 
buyer and seller with heads close together, working out ways 
and means to overcome the various obstacles which lie be- 
tween the goods on the factory floor and their safe receipt 
in a foreign warehouse. 

"Nor is it enough for the exporter merely to keep abreast 
of the mandatory regulations at home or abroad. Unless he 
steeps himself in the spirit of the times, unless he comes to 
know tendencies before they become facts, he is doing his 
foreign customers a grave injustice and working the cables 
overtime. Every outgoing mail from the good exporter car- 
ries with it letters of warning of changed conditions, and 
indications of the way probable regulations will affect both 
buyer and seller. 

"The present situation is not taken by the serious-minded 
export man as a wonderful opportunity for ready-made ex- 
cuses to cover slow deliveries. Rather is it accepted in the 
best of spirit as an opportunity to display executive ability 
in complying in the letter and the spirit with the wishes 
of governments, yet contesting against artificial handicaps 



HANDLING AN ORDER 207 

to maintain for his customers abroad the steady arrival of 
merchandise. 

Reivards for those Who 
Play the Game 

"The rewards have been great for those who have played 
the game. It became apparent to those whose enlightenment 
comes from within that the imperative need of the first few 
months of the war was the creating in the minds of their 
foreign customers of a thorough and abiding confidence in 
the exporting manufacturer. 'Strange things are going to 
happen,' they said to themselves, 'and unless our good friends 
thousands of miles away are willing to trust to our judgment 
and honesty we shall be woefully handicapped and they will 
be robbed of profits entirely possible, provided they have con- 
fidence in us/ 

"These far-seeing executives appreciated even as early as 
the closing months of 1914 that their position was to be re- 
lieved of the task of selling goods, and that their abilities 
were to be taxed with the problem of deliveries. 

"Today, many an export executive is still virtually a manag- 
ing partner of thousands of merchants. He not only decides 
what to ship, but also when to ship it and the prices at which 
the merchandise shall be forwarded. One of the ablest mer- 
chants in the Far East has picked out the dozen sources of 
supply in which he has the greatest confidence, and left with 
each the message: 'You are to ship me anything which you 
feel that we can resell at a profit, in any quantities which you 
can spare, by any means which you may think advisable, 
whether it be a row-boat or an 18,000-ton liner. Bear in 
mind that I am still far more interested in deliveries than I 
am in prices, and that you are to be the sole judge as to the 
price at which our lines are to be invoiced/ The executives 
honored by such a trust can scarcely be considered as less 
than managing partners of this merchant of the Far East." 

After all the business of buying and selling involves a part- 
nership between the buyer and seller. The strength of this 
partnership, however, depends not so much on the capital 
invested as on the judgment of the seller, and the confidence 
and trust of the buyer across the seas in the man who is sup- 
plying the merchandise. 



208 EXPORTING TO THE WORLD 

Invoicing Goods 
for Export 

Invoices for export trade involve many features that are 
foreign to the domestic document. Export invoices, moreover, 
are correctly termed "invoices" and not "bills" as in some 
foreign countries "bills" are recognized as bills of exchange, 
or drafts. 

The most important features of an ideal invoice are its 
accuracy, completeness and clearness. This is absolutely es- 
sential in dealing with a customer thousands of miles away. 
The customer has got to check his shipment when it reaches 
him, and unless the invoice is perfect he will find himself in 
considerable trouble. Instructions from a foreign customer, 
therefore, should be followed to the letter in the matter of 
making out invoices, no matter how absurd they may seem 
to be. 

Necessary Features 
in Export Invoice 

The salient features of an export invoice are these: 

Simplicity and clearness in language. 

Full description of goods invoiced, eliminating abbrevia- 
tions or terms known to the trade only. Officials who are re- 
quired to examine them may not understand these terms. 
Foreign customers cannot be expected to know them. 

Use of dollar sign before all prices, extensions and footings. 

Complete and exact weights and measurements such as 
widths, lengths, weights. Guess work must be avoided. 
Figures must be exact. 

Uniformity in handwriting or by typewriter in making out 
invoices. 

The number and date of the order. 

Text in language of the customer when necessary. 

The method of transportation and route. 

Numbers, weights, dimensions, marks and nature of pack- 
ages — whether cases, bales, crates, barrels, bags, sacks, etc. 

Terms of carriage. 

Separate code word for each item to facilitate reference 
to it by cable. 

Invoice of each item in the shipment. 



b 



DMPANYXINC.) 

CU DF ALL KINDS 



CABLE AOORESS HARTLEY NEW YORK 



cu 



REMINGTON 
UMC 



^iW?** 



SHIPPED VIA. "NAME OP 8TBAMER° 






EXPORT VALUE 



UNIT PRICE TOTAL NET 



$ 



100 
101/ 

] 
105/ 

105/ 

; 
107/ 

109/ 

111/ 

115 

114 



LOAD 58? 

LOAD Rl$t-5 
D 7-* 
E LOAD X7 D-l 

12A 22 CALIBRE 
/11A 12 C ATJOE 
EL 10A 12 GAUGE 




SO 



*it, marking, weights in pounds and kilos and meas- 



CUSTOMERS ORDER NO. 
CUR ORDER NO. 



TheRemingtqn Arms Unidn Metallic Cartridge Cdmpany.Cinc.) 

MANUFACTURERS OF 

SHOTGUNS, MILITARY S SPORTING RIFLES a AMMUNITION DF ALL KINDS 

WOOLWORTH BUILDING 

233 BROADWAY 

NewYdhk APRIL 26.1917. 



CABLE ADDRESS HARTLEY NEW YORK 



REMINGTON 
UMC 



TERMS 

90 DAYS SIGHT DRAFT S OLDTO C.8TEVENS0N & COUP ANY 
SANTIAGO CHILE. 



SHIPPED VIA. "NAME OP STEAMER" 



WEIGHTS 
EACH CASE 

NET LBS. GROSS LBS. 



190 
151 

199 
176 
224 
216 
122 
108 
108 



206 
165 
221 

196 

246 
240 

150 

142 
142 



WEIGHTS 
EACH CASE 

NET KILOS GROSS KILOS 



86.27 
68.59 
90.25 
79.82 
101.58 
97.95 
55-32 
48.07 
48.07 



9?. 42 

75.92 

100.21 

88.88 

112.46 

108.84 

68.02 

64.40 

64. 4C 



DESCRIPTION 



10 

10 

4 

4 

4 

4 

20 

10 

10 



CARTRIDGES CALIBRE 52 SfcW 
MEA8.25xl5x9j" 1 CASE 

CARTRIDGES CALIBRE 58 8&W 
MEA8.l5£xl5xlO£" 2 CASES 

VW CLUB CARTRIDGES 16 GAUGE LOAD 585 
MEA8. 29^x17x10" 2. CA8E8 



REMINGTON CARTRIDGES^ 
MEAS.15X9X9'' 

ARROW CARTRIDGE! 
MEAS.l5x9£x9£" 



NITR0 CLUB 
MEAS. 



RBMINGTO 
MEAS. 




JJGE LOAD Rl« 



LOAD 7.4 
A8E3 



8 12 GAUGE LOAD X r < 
2 CA8ES 



TO RIFLES MODEL 12A 22 
W 2 CASES 



REMINGTON AUTOLOADING SHOTGUNS M/llA 12 
MEA8. 56$xl 6£xl6" 1 CA8E 



REMINGTON REPEATING SHOTGUNS MODEL 10A 12: 
MEA8. 56£xl 6*xl6" 1 CASE 



CA8ES MARKED:. 




VALPARAISO 

A specimen of an Export Invoice. Manufacturers have different forms drawn up in distinct methods. Terms of payment, marking, weights in pounds and kilos and mea 

urements of each case will be noted here. 



D-l 

Calibre 

GAUGE 
GAUGE 



UNIT PRICE TOTAL NET 



HANDLING AN ORDER 209 

Invoice of material for which no charge is made, such as 
catalogues or electrotypes. 

Invoice of accessories of spare parts for which no charge is 
made with value attached. 

Gross and net weight of each package, and number. 

Gross and net weight of each package when a number of 
them are bound together so as to form one package, as well 
as gross weight of whole. 

Conversion of value of invoice into foreign currency, when 
necessary, at the foot of invoice. 

Signature of responsible member of firm or official having 
authority to sign for firm. 

Placing at bottom of invoice "E. and O. E." (errors and 
emissions excepted). This gives shippers right to correct 
errors, etc. 

Other Essential Details 

in Connection With Invoice 

It is good practice to always supplement the invoice with a 
letter explaining in fuller detail the shipment, and giving all 
the additional information that the customer may desire to 
know. If the letter is sent in advance of the shipment the 
customer may want to know the name of the steamer on 
which the goods are being sent, the date of the shipment, the 
route to be followed, and information regarding transshipment 
as well as probable arrival of the steamer at destination. Ex- 
port invoices should be made out in triplicate. When dealing 
with the bank more are necessary as the bank will require 
two invoices. The third one will go to the customer. 

Discounts should be calculated and deducted on the face 
of the invoice so that the net costs will appear with each 
extension. 

Other Documents in 
Connection with Invoice 

Sometimes all additional expenses are enumerated in the 
commercial invoice, such as transfer to steamer, ocean freight, 
insurance, etc. The better form, however, is to limit the in- 
voice purely to the cost of the goods. Additional expenses 
should be incorporated in a separate sheet known as a State- 



210 EXPORTING TO THE WORLD 

ment of Charges. This Statement of Charges will include the 
invoice total as well as additional charges as have already 
been indicated. The Statement of Charges must always be 
attached to the invoices. 

A Packing List or Measurement Note indicates what each 
case contains as well as its net and gross weight, and cubic 
measurements. 

A notice of a draft by shippers indicating the amount and 
terms of the draft, and the method of collection is customary 
in export trade. 

Additional papers such as certificates of inspection, analysis, 
weight, etc., may be demanded in various countries. The 
shipper should consult the consuls of the countries to which 
his goods are going for information, on the matter. 



Chapter XIV 

PACKING FOR EXPORT 

Inexperienced exporters are to blame for poor packing — 
Merchandise must be securely packed — Poor packing means 
loss of orders — factors to be considered in packing for ex- 
PORT — Kind of packing required for shipments for export — 

HOW MACHINERY IS PACKED FOR SHIPMENT — FOREIGN REQUIRE- 
MENTS MUST BE MET IN PACKING EFFECT OF WEIGHT ON CUS- 
TOMS duties — Regulations in countries that may affect 

PACKING— HOW CASES FOR EXPORT SHOULD BE MARKED. 

American manufacturers and exporters have been accused 
by writers in the popular trade magazines, and by foreign 
merchants of being negligent in the matter of properly pack- 
ing merchandise for foreign destination. While it would be 
difficult to run down the basis for such a sweeping criticism, 
nevertheless, in justice to the pioneer American foreign trade 
merchants it must be said that business men from foreign 
countries have often applauded and pointed out to their fellow 
men the efficiency of the American exporter's packing, and 
emphasized the necessity of copying his methods in order to 
satisfy the overseas merchants. It would seem, therefore, 
that the monopoly of proper packing is not confined solely to 
European or other foreign fields. There is no doubt that a 
great volume of merchandise leaving American ports arrives 
in a damaged condition at its destination owing to negligence 
in packing. But if one should trace this trouble to its source 
one would likely find that this is due to inexperience and ig- 
norance on the part of the hundreds of American manufac- 
turers and exporters who are as yet new to the foreign trade 
game. 1 

1 That the packing and shipping methods used by our locomotive exporters 
are not inferior to those employed in other countries is well shown by the fol- 
lowing examples : One company shipped a locomotive into Colombia over moun- 
tain trails which necessitated transportation on mule back. After the locomotive 
had been built in the United States it was taken down and the parts placed to- 
gether in large cases and shipped to Medellin, Colombia, where it was landed. The 
pistons, cylinders, rods and other parts were then securely wrapped in burlap and 

211 



212 EXPORTING TO THE WORLD 

It is the purpose of this chapter to deal with some of the 
principles and methods governing packing for export as well 
as some of the conditions under which merchandise is trans- 
ported to its final destination in foreign countries. 

Merchandise Must 
Be Packed Securely 

Merchandise for export must be packed securely. There 
is no use to attempt to eliminate costs by packing goods for 
foreign customers as cheaply as possible. It is false economy. 
The foreign merchant is interested in a shipment that arrives 
in good order and not in one in which half the merchandise 
has been damaged by water or by rough handling. American 
manufacturers are often tempted to pack their goods for 
foreign use in cases that are inexpensive in order that they 
may avoid higher quotations. 

This, however, is not sound policy. It is better to properly 
and safely pack goods for export, and either make an extra 
charge for packing, or advance the quotations to cover the 
entire costs. After all, the foreign customer is interested in 
the safe arrival of his goods for re-sale. Often these foreign 
importers would rather pay an additional sum for goods 
properly protected against damage than suffer loss as the 

packed on mules, reaching Bogota, after many days, in perfect condition. The 
locomotive was then assembled and operated perfectly. 

Since the war began another locomotive company has shipped more than 400 
locomotives to interior Siberia. They were built in the United States, packed for 
shipment, sent via Magellan and the Pr.r.ama Canal, to Vladivostok, erected in 
record time in the yards of the Siberian railroad, and proceeded under their own 
steam to their destination. Today they are hauling the vast stores of munitions 
imported through the back door of Russia from the United States and Japan. 
When the transaction was completed not more than one-tenth of 1 per cent of the 
order was found to have been broken or lost in transit 

Locomotive manufacturers have been called upon to ship to the most out-of- 
the-way places which formerly obtained their rolling stock from Europe. Engines 
have gone to Katanga, away in the interior of Africa, in the Belgian Kongo, to the 
Cold Coast, to Rhodesia and to Portuguese and East Africa, and up to date not a 
single complaint has been received, although it was the first time that A merican 
locomotive orders had been received from these places. 

The first steam railway in Chosen, connecting Chemulpo, on the seacoast, with 
Seoul, the capital, was built and its equipment ordered from the United States as a 
result of the far-sighted activity of an American business man. The track was the 
American gauge, 4 feet 8£ inches. When this road was extended by the Japanese 
after their occupation of Korea the American gauge was still used, and when the 
South Manchurian Railway was linked up with it the American gauge was continued. 
American locomotives and rolling stock have accordingly a preference in that market 
and the bulk of the equipment is manufactured in the United States. 

Possibly one of the most severe tests for prood packing was ^ndured by a case 
containing a locomotive packed by an American firm. Th<= la~.k of land-locked 
haibors on the west coast of South America compels the disrharp-? of rarjro in open 
roadsteads. The rise and fall of lighters renders arduously dangerous the unloading 
of heavy merchandise. Nevertheless, when a case containine: a Io"o-no'ir?> ra') and 
locomotive parts went overboard as a result of improper handling, 't floated The 
tide swept it out to the Pacific for several miles before a tn<r cn-'J o' r <vt.ii- ■ •>, 
but it was towed back and finally landed with the contents u-iinrvr >-(•<]. '| j -> 
examples of brilliant enterprise in American export trade ar« •■<< ■ >i 

unabridged reference here— Report of Fourth National Foreign TruL" Ct>-:v.-ni«on. 



PACKING FOR EXPORT 213 

iesult of poor packing. Some American firms have followed 
the British method of adding additional charges for certain 
kinds of packing for goods that require it. In England pro- 
fessional packing companies undertake this work for ex- 
I^orters and make charges in accordance with services ren- 
dered. 

Who Is Responsible for 
Poor Packing for Export? 

If the manufacturer is exporting direct it is his duty to 
become acquainted with all the requirements peculiar to ex- 
port packing as well as the existing regulations in foreign 
countries regarding the packing and marking of goods. If 
the manufacturer is supplying a commission house with mer- 
chandise intended for foreign customers the commission 
house should give full instructions to the manufacturer re- 
garding the packing of the goods. The commission house is 
supposed to know where the goods are going, how they are 
to be transported, when they reach a foreign country, and 
how they are to be marked, etc. Of course, if the manu- 
facturer violates these instructions he must be held responsi- 
ble. 

Manufacturers do not often follow these instructions, how- 
ever, as the following statement from an official of a New 
York export house suggests : 

"We do little or no packing ourselves; the goods are 
packed by the person from whom we order for export and 
the cases are not opened by us. In all instances, we give 
instructions to pack most carefully, but we regret that our- 
selves and our friends have had, in very numerous instances, 
to suffer considerably through the carelessness, indifference, 
or ignorance of the American manufacturer in reference to 
this important particular. * * * The American manufacturer 
fails to realize that while he may sometimes save a few 

An old-established manufacturing concern that has systematized its foreign 
business so that it moves right along automatically with the domestic permits us 
to describe the way an order is handled by its forces. 

This company has devoted much study to the packing of merchandise sent 
abroad, but the uninitiated onlooker in the packing room would notice nothirg 
extraordinary about the handling of South American shipments if his attention were 
not specifically called t it. The whole thing has been well systematized. The 
man who is at the head A the packing department personally supervises or himself 
packs the export stuff. He is an adept at this. 

In the first place, he has had all his packing materials assorted, and the best 
of the wooden boxes are set aside for the export orders. He does not use boxes 
different from those needed for domestic orders. He says that the railroads handle 
boxes in no gingerly way, and so he must pack well even for a 100-mile shipment. 
But for the boxes to hz sent to South .America he picks the best shooks the sides 



214: EXPORTING TO THE WORLD 

dollars at this end on a shipment, the buyer in foreign mar- 
kets, by reason of lack of facilities to replace broken parts 
readily and cheaply, often has to pay out five or ten times 
what would have been the original cost in this country, or, 
failing to be able to duplicate, there is loss of time and in- 
terest on the value of the shipment for the several months 
until parts can be brought from this country." 

Negligence on the part of the manufacturer and agent alike 
is illustrated in a report from Consul General William H. 
Michael, of Calcutta, which is as follows : 

"It is probable that the reason the goods were packed so 
poorly for foreign trade was because the manufacturers 
packed at the factory for shipment to their export houses in 
New York or other ports, and the export agents, instead of 
repacking, simply forwarded the goods in the original cases. 
While the original cases were strong enough and entirely 
suitable for transportation from the factory to the shipping 
port, the packing was utterly unsuited to the long and severe 

and ends that are made of good, tough, solid boards without knots, the kind that 
will take many nails without splitting. 

Wherever possible, South American shipments are made in burlap bales. A 
large order from one of the west-coast mining companies for overall jackets was 
packed in this way. It went in bundles of 10 dozen jackets. The jackets for 
each bale were carefully stacked, one bundle upon another in a screw press with 
a board at the bottom and another at the top. The press was screwed down till the 
stock of jackets occupied less than two-thirds of its loose bulk. Then four stout 
hemp ropes were passed around the top and bottom, outside the boards and securely 
tied. When the pressure was released, the bundle was found to be pressed hard 
together, each garment so tightly held that it was impossible to move it without 
cutting the ropes. 

The pressing took about 10 minutes of two men's time. The chief packer 
finished the packing after the bundle had been thrown upon his work table. A 
length of new burlap, a piece of heavy waterproof paper of the same size, and 
sheets enough of a special tough "leather paper" to cover this were already on 
the table. Deftly the packer covered the bundle in another 10 minutes, sewing the 
burlap with heavy twine with a seam that knots it together every 2 inches, so that 
breakage of the cord anywhere would not permit the covering to come off. 

Not all the company's goods can be baled in this way. The tight pressure 
breaks composition buttons on some garments. Others it is necessary to box, 
because baling would result in their reaching the customer so sharply creased, or 
pressed out of shape, as to be less salable than when boxed. When boxes are used, 
the goods are carefully placed in them and in most cases forced in with some 
pressure in order that there shall be no movement or any space of the box un. 
occupied. A tightly packed box, securely nailed and strapped with iron bands or 
good twisted steel wires, will not come aptirt as easily as one loosely filled. The 
boxes used by this concern are of wood about three-quarters of an inch thick. They 
are especially reinforced at the edges. The lining of waterproof paper, next the 
wood, and of "leather paper," next the goods, is always put in foreign shipments. 

The marking and shipping instructions are especially given upon the order 
blank which the packer receives with the merchandise. The marking is usually 
done according to the customer's directions, which conform to the customs require- 
ments of the country to which the shipment is bound, with the rules of the steam- 
ship company, and with the customer's own business system. The bundle wrapped 
in burlap was going to a mining company in Chile. It has its own rules. This 
company's private mark was to be stenciled on the top of every bundle or box and 
on three sides, together with the dimensions, the gross and the net weight given 
both in pounds and kilos, and the name of the port of destination. The manu- 
facturing company added its own name and the legend "Made in U. S. A." in the 
extreme corner of one side. The work of packing and marking is done with rapidity 
that comes from long practice in this company's shipping room. The packer had his 
quick way of measuring, weighing, and stenciling. 

A special employee in New York attends to the shipping of foreign goods, 
another cooperates in securing insurance documents, seeing to consular invoices 
and bills of lading, and in dealing with the bank that collects the draft, which is a 
part of the transaction. — "The Americas." 



PACKING FOR EXPORT 215 

strain of transit from point of shipment to India. If manu- 
facturers would either pack the goods intended for foreign 
markets at the factory as they should be packed, or require 
their export agents to take the goods out of the original 
cases and repack, much trouble and damage to American 
foreign trade would be overcome." 

Poor Packing Means 
Loss of Many Orders 

A great number of export orders are lost to American manu- 
facturers and exporters because they do not seem to take 
any interest in the condition of the goods on arrival at their 
destination. A Brooklyn manufacturer lost a fine order for 
machinery for a merchant in Ecuador because the packing 
in which it was contained broke down upon arrival at an ex- 
porter's place of business across the river in New York. 
What chance would such a shipment have in a long voyage 
to Ecuador? 

Manufacturers should follow instructions from importers 
closely. Perhaps, some of these instructions may seem queer 
but it must be remembered that the importer probably knows 
what he is talking about. He has a reason. He knows better 
than the manufacturer that certain conditions must be met 
and he probably has learned what packing will prove satis- 
factory. 

Factors to Be Considered 
in Packing for Export 

The greatest volume of our export trade goes to countries 
where transportation facilities are as good as in the most 
advanced countries of the world, but there are countries 
where the means of transportation have not been so highly 
developed and where it is necessary to ship annually millions 
of dollars in American merchandise. The problem of trans- 
portation, therefore, becomes a factor in the method of pack- 
ing for export consumption. Goods shipped to England may 
not require that degree of care that goods shipped to the 
interior of Peru or Bolivia may demand. Shipments to Can- 
ada do not require any more attention than shipments from 
New York to San Francisco. Shipments which involve rail 
and water transportation may require a certain method of 



216 EXPORTING TO THE WORLD 

packing. In some places transshipment is necessary. Here, 
also, the best packing possible is necessary in order that 
goods may not be damaged. 

In order to efficiently pack for export, therefore, the manu- 
facturer must not only know how to pack in order to meet 
all sorts of transportation conditions, but also know when 
such packing is necessary. Goods may be carried by mule, 
burro, llama, bull, and camel and by coolies. Such transporta- 
tion requires a limit in the weight of cases. They should 
be limited to 200 or 250 pounds each as some of these beasts 
of burden cannot be overloaded. The loads that various pack 
animals can carry are approximately as follows: Mule, 200 to 
250 pounds; burro, 150 to 200 pounds; llama, about 100 
pounds; camel, 350 to 450 pounds. Packages for transporta- 
tion by these animals should be one-half the foregoing weights 
as one package is carried on each side. Thus, a mule can 
carry 250 pounds if divided into two packages, but if a pack- 
age weighs over 150 pounds he can carry one only, and as 
this rests on his backbone, he can not carry much above this 
weight. Man carriers are capable of carrying from 100 to 
150 pounds. 

Climatic Conditions 
Affect Export Packing 

In Honduras it rains hard for at least five months in the 
year and freight going into the interior covered with canvas 
is usually damaged unless it is properly packed to meet this 
condition. A like condition exists in Colombia where ma- 
chinery destined for the interior is frequently exposed to the 
rains. The rainfalls in India produce a dampness in the air 
that may damage goods not protected to meet this peculiar 
condition. In Venezuela the tropical moisture may destroy 
food products such as dried fruit and cereals if packed in 
cardboard boxes. Climate, then, is another factor that de- 
termines the method of packing for export. 

Port Conditions Also a 
Factor in Export Packing 

In many ports of the world such as those found along the 
west coast of South America lighters are employed in getting 
merchandise off the steamer. In these places goods are sub- 



PACKING FOR EXPORT 217 

jected to rough handling. The lighters ride alongside the 
ship and the cargo is hoisted from the hold in slings. Each 
sling load usually contains a variety of goods from ink bottles 
to dry goods, and weighs a ton or more. As the lighter rises 
or falls with the waves the sling load will endeavor to meet 
it, and there is a crash. The well protected goods are safe, 
but those which were not carefully packed to meet just such 
contingencies are doomed. Nor is this all. There is yet to 
remove the goods from the lighter to the quay. More man- 
handling. Once again, they may probably require placing 
on freight cars for shipment to the interior. These condi- 
tions must be taken into consideration by the American ship- 
per if he desires to retain the good will of his foreign cus- 
tomer. The manufacturer should know the treatment his 
goods are to receive in shipment to a certain foreign point. 
He should, therefore, do his packing accordingly. 

Protection from 
} ' lifer big Necessary 

Various methods have been suggested for packing to dis- 
courage pilfering in foreign ports. This crime is quite common 
particularly where shipments of boots and shoes, dry goods, 
hardware, notions, and food products are involved. The use of 
tongued and grooved lumber for boxes, strapping of cases and 
boxes with steel bands, the use of wire drawn around each end 
and the middle of the case so tightly that it sinks into the 
wood at the corners, the ends of the wire then being twisted 
and cut close with nippers, the use of safety clips of various 
kinds to bind the top and bottom of the case to the sides — 
all these have been recommended to prevent pilfering. 

In a circular issued by the Federal Export Corporation of 
New York the following method is recommended: "Stealing 
from export packages has been the bane of the export trade 
for centuries, and pilfering has become such a matter of 
course that longshoremen in foreign ports have been known 
to strike because one of their number was arrested for break- 
ing cases and stealing goods. The use of matched lumber, 
with box strapping, will go far to retard pilfering, but a stiff 
No. 8 or No. 10 wire, drawn about the case so that it bites 
into the wood, will be the best preventative. Use an old- 
fashioned fence stretcher to pull the wire taut, staple the 



218 EXPORTING TO THE WORLD 

twisted ends fast to the case and seal with lead. Any case 
can be broken into, so your success will be attained if you 
make it too difficult to open without detection." 

Kinds of Packing Required 
for Shipments for Export 

Merchandise may be packed in cases, crates, or bales. The 
character of the packing generally depends upon the nature 
of the goods, and the section of the world to which they are 
destined. Cases, of course, are the strongest and best. Paper 
or paste-board boxes will never do for export packing. The 
lumber used for the manufacture of boxes or crates should 
be sufficiently thick to give ample protection to the merchan- 
dise. The thickness of the lumber should depend upon the 
weight of the contents. Lumber as light as is consistent with 
safety should be employed in order to reduce the weight of 
the case as much as possible. Knotty lumber should be 
avoided. If knots exist, however, they should be covered 
over with tin from the inside. 

As, in many cases, freight is charged on the basis of cubic 
measurements, it should be the aim of the manufacturer to 
pack his merchandise as compactly as possible. Every avail- 
able inch of space should be utilized. Goods should be tightly 
packed in order to avoid shifting within the case. The manu- 
facturer should visualize the career of a case from the moment 
it leaves the factory to its final destination. He will then 
realize the necessity of having it so carefully prepared that it 
will stand the most vigorous handling, and the contents will 
remain intact whether the case is standing on its head or on 
its side. 

An interesting story was told by Captain H. R. Moody, 
Q.M.C., U. S. A., Chief of the Packing Service in connection 
with baling goods for export to the A. E. F. at the Sixth 
Annual Foreign Trade Convention in Chicago. Captain 
Moody said: 

"In no respect did the Packing Service effect greater space 
economy than in the packing of clothes for the A. E. F. 
Formerly clothing had gone forward to troops packed loosely 
in wooden boxes. The Packing Service devised the system of 
baling all clothing, and a baling plant was set up at the army 
supply base in Brooklyn. The Service gave scientific atten- 



PACKING FOR EXPORT 219 

tion to the proper folding of garments and eventually, after 
exhaustive experiments, developed a system of folding that 
allowed the maximum number of pieces to a bale. It was 
found that these new methods saved two-thirds of the space 
that had been used formerly for the shipment of the same 
quantity of goods in boxes, to say nothing of the great saving 
both in labor and boxing materials. 

"The baling plant in New York in the calendar year of 1918 
shipped to France approximately 1,000,000 bales of clothing 
and textile and other equipment that could be baled. The 
saving in money to the United States Government by this 
method of packing at this one plant in a single year amounted 
to approximately $55,000,000. The largest item in this econ- 
omy was the matter of cargo space, which is estimated at 
$49,000,000, saved to the Government. The complete state- 
ment of the financial saving in the shipment of these 1,000,000 
bales is as follows: 

Material . . $1,940,000 

Labor 583,000 

Tare Weight 75,000 

Cargo Space 49,080,000 

Total $51,678,000 

"In addition to the financial saving there was a large saving 
in raw materials which count for more money to a nation 
engaged in a desperate war. This million bales of clothing 
saved 58,000,000 board feet of lumber which would have been 
used in boxing, had the old system of packing been followed. 
The lumber which would have gone into these boxes re- 
quires 30 years for its growth, while the burlap covering the 
bales was made of jute which is raised in semi-annual crops. 

"The size of the bale adopted was 30 inches by 15 inches 
by 14 and up to 19 inches. It is interesting to note that this 
size was determined upon because it was found that the 
burlap covering bales of this size would cut into sand bags 
with a minimum amount of waste material. The army abroad 
used great quantities of sand bags. Thus, by wrapping bales 
in burlap pieces of proper size, there was saved a considerable 
amount of cargo space previously occupied by baled burlap 
which had formerly been shipped to France to be made into 



220 EXPORTING TO THE WORLD 

sand bags. It is also notable that baled clothing arrived in 
France in much better condition than clothing which had been 
packed in cases." 

Captain Moody's report reveals the tremendous economic 
saving that may be accomplished by American shippers if 
they pay close attention to packing. 

The process in packing goods in bales is sometimes like 
this : (a) wrap goods first in ordinary paper ; (b) a sheet of 
canvas should then be laid over the entire bundle; (c) a layer 
of tarpaulin or cloth should follow next; (d) the final layer 
should consist of a double canvas or burlap. The outer cover- 
ing is then tightly sewn with strong twine. 

The necessity of watertight linings in packing has already 
been emphasized elsewhere in this chapter. Tarred or oiled 
papers may be used for this purpose. The British generally 
use hermetically sealed zinc or tin-lined cases to avoid ex- 
posing goods to rain or dampness. Manufacturers have a 
right to expect an additional amount to cover the cost of such 
cases, however. 

Sometimes cases lined with waterproof paper, inside of 
which additional layers of ordinary packing paper are placed, 
are used. Manufacturers also use oilcloth or taupaulin but in 
some countries a duty is charged for oilcloth which the im j 
porter may not desire to pay. 

Shippers usually use either excelsior, straw, hay or waste 
paper for stuffing empty corners in cases. The character of 
this material depends, however, on the nature of the goods 
and the route which the shipment is to follow. 

How Machinery Is 
Packed for Shipment 

Machinery in transit must be protected from water. A 
covering of vaseline or grease on the bright steel parts will 
provide ample protection. The greatest care should be ex- 
ercised in preparing machinery for shipment to foreign coun- 
tries as the effects of climate encountered in other parts of the 
world may sometimes prove disastrous. The cases may be 
several weeks in reaching their destination during which time 
they may be exposed to the rain as well as occasional doses 
of salt water. The composition of the coating is therefore of 
first importance; but here again no rule can be laid down, as 
conditions vary so much. Crude gasoline, white-lead paint, 



PACKING FOR EXPORT 221 

boiled oil, and tallow may be used. The coating, however, 
must be free from all acid and capable of spreading evenly. 
It must set quickly to a sufficient firmness, and must dissolve 
easily when wiped down with oil, turpentine or petroleum. 

Essentials in Packing 
Goods for Exportation 

A double check should be made on all goods entering cases 
for packing for export. Unless this precaution is taken the 
manufacturer will learn without much delay that he is leaving 
a trail of disappointed customers in foreign countries whose 
chief complaint may be that there is something missing from 
their original orders. In instances where the shipment consists 
of a number of parts of one article, as a machine for instance, 
the greatest care is necessary. The machine must be com- 
plete. Every part and accessory must be in the packing 
room. Countershafts, change wheels, spare pulleys, belts, lu- 
bricators, and spanners should be grouped alongside the ma- 
chine. With the aid of an assistant the packer should care- 
fully check off every item on his packer's sheet. The leaving 
out of one single part may result in disappointment, delay and 
in much correspondence, not including the additional ex- 
pense in later forwarding the missing parts. 

The weighing of the contents of each case before packing 
is essential. This involves the net weight of the goods, and 
the gross weight when packed. With the totals in his pos- 
session the manufacturer has sufficient proof against claims 
that the exact quantity of the goods as checked was not 
shipped. Also, some countries require data on the "legal" 
weight — the actual weight of the goods themselves with 
their immediate containers, as well as the gross weight of 
the entire case. 

Foreign Requirements Must 
Be Met in Packing 

The essential factors in packing may be listed as follows: 
Strong cases, waterproof linings, straps made of strong mate- 
rial, and protection against pilfering. It has already been 
indicated how transportation facilities, the character of the 
port to which goods are destined, and climatic conditions are 
determining factors in the matter of intelligently packing for 



222 EXPORTING TO THE WORLD 

export. There is still another consideration involved. What 
kind of packing does the man at the other end require in 
order to satisfy the customs regulations or any other peculiar- 
ities in that region? Of course, the manufacturer should 
know this. He can obtain full instructions from his foreign 
customer. Once obtaining all the necessary information in 
connection with the preparation of a shipment to a foreign 
country he should see that the customer's requirements are 
fully satisfied. If one method of packing is much more eco- 
nomical than another and the customer requests the economi- 
cal method the manufacturer should see that the buyer's 
wishes are considered. The following story may illustrate 
the point : A dealer in a Central American country received a 
shipment of tobacco from the United States packed in zinc- 
lined cases instead of the customary bales. The difference 
in freight and duty amounted to $300. In the country to 
which the shipment was sent the duty on tobacco was the 
gross weight instead of ad valorem and the packing cases had 
to be paid for at the same rate as the tobacco. The fault 
here lay in the failure of the manufacturer to study the regu- 
lations of the country to which the goods were destined. Also, 
he should have asked for specific instructions from his buyer 
as to the method of packing, etc., and the buyer should have 
furnished them. 

Consuls Should 
Be Consulted 

In shipping goods to foreign countries the manufacturer 
who has had no experience in packing to meet foreign con- 
ditions should consult either the Department of Commerce, 
the Pan-American Union, or, if he is a New York manufac- 
turer, he should consult the consul of the country to which 
he is shipping the goods. Reliable information may be ob- 
tained from these sources, and it may save the shipper a great 
deal of trouble. 

In packing for foreign shipments the manufacturer must 
take these additional matters into consideration: (a) weights 
and dimensions of cases or packages should be reduced as 
much as possible in order to cut freight costs: (b) cases 
should be small and light in order that they may be easily 
handled for interior transportation ; (c) packages should con- 



PACKING FOR EXPORT 223 

tain only one class of goods if possible as different classes of 
goods are subject to different rates of duty in certain foreign 
countries; (d) advertising matter should not be included with 
goods in cases as duties are imposed on such matter which 
the buyer may not desire to pay unless he has requested it 
from the shipper; (e) in countries where duty is imposed on 
gross weight the manufacturer should make cases as light as 
possible; (f) in countries where some goods are subject to 
duty on gross weight and some on net weight goods subject 
to the same kind of duty should be packed separately, and not 
mixed: (g) in other countries, however, mixed packing is al- 
lowed as long as merchandise has been properly declared. 

Effect of Weight on 
Customs Duties 

In some European countries the dutiable weight of the 
imported merchandise is determined by the rate of duty. 
Merchandise subject to a rate of duty above a certain amount 
is dutiable on actual or legal net weight, while merchandise 
subject to a lower rate is dutiable on gross weight. In Latin- 
American countries, however, the basis for duty is generally 
indicated in the tariff of each item. It is important to note 
that actual net weight means the weight of the merchandise 
alone, without packing; legal weight is understood to mean 
the gross weight less a certain percentage for tare, which dif- 
fers in accordance with the container, and is fixed by a sched- 
ule annexed to the tariff. In some countries the weight of the 
immediate containers is sometimes included in the dutiable 
weight of the article. 

Articles of commercial value used as containers may be 
dutiable separately in some countries. French regulations 
provide that articles imported as containers of merchandise 
dutiable on gross weight are dutiable separately only if the 
rate applicable to them exceeds by more than 10 per cent the 
rate applicable to the contents. 

Duty may be reduced to a minimum if the manufacturer en- 
deavors to keep the weight of the packing as low as possible 
not only for goods subject to duty on legal net weight but 
also on goods subject to duty on gross weight. 

It has been suggested that a saving on duty may be ef- 
fected by shipping the inner containers separately from the 



224 EXPORTING TO THE WORLD 

merchandise for which they are intended. In some countries 
the weight of the goods alone is used as a basis for duty 
while the inner containers shipped separately may be ad- 
mitted at a lower duty. 

Regulations in Countries 
That May Affect Packing 

Regulations in different countries affecting packing are 
constantly changing and the wise manufacturer will make it 
his duty to apply for the latest information on the subject 
from the available sources that have already been mentioned 
in this chapter. As a basis for determining the actual re- 
quirements, however, the following information from the prin- 
cipal countries will prove of value to those who are making 
foreign shipments: 

Argentine — Most articles listed in the tariff dutiable on 
legal weight. Shipment of merchandise of different classes in 
one case should be avoided as customs authorities may apply 
duty of highest-taxed article in shipment to entire shipment. 

Bolivia — Some articles are dutiable on net weight, some on 
gross weight, and some on weight of merchandise together 
with immediate packing. As long as mixed packing is not 
intended to defraud customs there is no penalty for such 
packing. 

Brazil — Duty on gross weight, or on legal net weight or 
actual net weight may be imposed on articles dutiable by 
weight. Gross weight means weight of goods with packing, 
except rough wooden containers. Legal net weight means 
gross weight less tare allowances. Actual net weight means 
weight of goods without any packing. Duty on actual net 
weight is imposed on goods dutiable on legal net weight and 
actual net weight if imported in same package. Packages 
containing only merchandise dutiable on net weight but with 
different tare allowances are subject to same rule. Weight 
of packing is distributed proportionately when goods subject 
to different duties, but dutiable on gross weight, are imported 
on same package. 

Chile — Merchandise subject to duty by weight may be duti- 
able on net weight, gross weight, weight including packing, 
or weight including containers. The customs tariff should be 
consulted for further information. 

Colombia — Duty levied on gross weight, and merchandise 



PACKING FOR EXPORT 225 

subject to different rates of duty may be packed in same con- 
tainer provided gross and net weight of each kind of mer- 
chandise is indicated. 

Costa Rica — Practically same regulations as Colombia. 

Cuba — Articles dutiable on gross weight, actual net weight, 
or legal weight. 

Ecuador — Merchandise dutiable either on gross or net 
weight, Only requirement in packing in same container mer- 
chandise subject to different rates is that shipper state in 
consular invoice net weight of each kind of merchandise as 
well as gross weight of entire package. 

Guatemala — Duty on merchandise may be levied on net 
weight, on weight including packing, except outer containers, 
or on gross weight. Where goods dutiable on weight in- 
cluding packing, imported loose in outer container, weight of 
latter is not included in dutiable weight. When goods duti- 
able on weight including packing are imported in same re- 
ceptacle with goods dutiable on gross weight, duty on latter 
merchandise levied on weight including packing with addi- 
tion of one fourth thereof, to compensate for outer container 
which is not included in weighing merchandise. Merchandise 
subject to different rates of duty in same receptacle subject 
to fine. 

Honduras — Merchandise subject to duty is dutiable on 
gross weight. 

Mexico — Duty on merchandise dutiable by weight is levied 
on net, legal, or gross weight. No penalty imposed for mixed 
packing if merchandise is declared properly. This data is 
taken from provisions existing in normal times in Mexico. It 
is subject to change. 

Nicaragua — Duties levied on gross weight. Packing of 
merchandise in one container limited to 10 different kinds. 

Panama — Imports dutiable ad valorem and not on weight. 

Paraguay — Argentine rules apply to Paraguay. 

Peru — Where articles are dutiable by weight, basis for 
levying duty may be net weight, gross weight, or legal weight. 
When goods dutiable on gross weight are imported in same 
container with goods dutiable on different basis or subject 
to different rates of duty, or with samples without value, 25 
per cent is to be added to weight of such merchandise weighed 



226 EXPORTING TO THE WORLD 

with its immediate packing and its share of the straw, shav- 
ings, or similar packing material. 

Salvador — Duty is levied on gross weight. No objection to 
mixed packing as long as merchandise is properly declared. 

Uruguay — Some articles dutiable on gross weight, some on 
legal net weight and in some cases weight of inner receptacle 
is included in dutiable weight. No penalty for mixed pack- 
ing. 

Venezuela — Duty levied on gross weight. Rate of highest 
taxed article is applied to entire shipment when articles sub- 
ject to different rates of duty are imported in same packing. 

Europe 

Owing to unsettled conditions in Europe only those coun- 
tries which maintained their commercial relations with other 
nations during the war are indicated here. There have probably 
been many recent changes and the information given below is 
given as a basis merely. 

Belgium — Goods dutiable either on actual net weight, or a 
tare allowance is made. 

Denmark — Duties levied on net weight which includes 
weight of immediate receptacles in which goods are sold in 
letail trade as well as wrappers of paper or cloth. 

France — Articles subject to rate of less than 10 francs per 
100 kilos (87.5 cents per 100 pounds) are, dutiable on gross 
weight; articles subject to higher rates are dutiable either on 
actual or legal net weight. 

Italy — Articles subject to rate not exceeding 20 lire per 100 
kilos ($1.75 per 100 pounds) dutiable on gross weight; articles 
subject to higher rates of duty are dutiable either on actual 
or legal net weight. 

Netherlands — Duty levied on legal net weight. 

Norway — Duty levied on legal net weight, but in some 
cases only weight of outer container is deducted from gross 
weight while that of immediate packing is included in dutiable 
weight. 

Portugal — Articles subject to rate not exceeding 5 reis per 
kilo (22.6 cents per 100 pounds) dutiable on gross weight; 
articles subject to higher rates dutiable either on actual or 
legal net weight. 



PACKING FOR EXPORT 227 

Spain — Dutiable weight not determined by rate of duty. 
Most articles dutiable on net weight, which includes weight 
of immediate packing and containers in which goods are 
sold in retail trade. 

Sweden — Duty levied on legal net weight, tare allowance 
being specified in tariff for each item. In some cases dutiable 
weight includes also weight of immediate containers. 

Switzerland — Duty levied on gross weight. Where articles 
are imported without usual containers certain percentage 
added to dutiable weight. 

Other Countries 

Imports are usually subject to ad valorem rates of duty in 
the most important British possessions as well as in China. The 
customs tariff of France applies to the French colonies. The 
net weight is taken as a basis for the collection of duty on 
imports dutiable by weight in Japan. 

How cases for 

Export should be marked 

Symbols instead of names of customers in full are used in 
marking cases for export. The determining factors in the 
choice of symbols used are quick identification, abbreviations 
and secrecy. Secrecy is sometimes desirable when the manu- 
facturer does not wish to reveal the name of the consignees. 
Quick identification is necessary in order to avoid delay on the 
docks, etc., or in the ship's cargo. Only the essential marks 
should be used on cases or packages. If old cases are used 
care should be taken that the old marks are removed. The 
contents of a case should not be revealed by writing on the 
outside, as this serves as a tempting bait for thieves. 

The symbol of the consignee, the name of the port, the 
serial number of the case, the gross and the net weight in 
pounds or in kilos or in both, the measurement of length, 
breadth and thickness of the package in feet and inches are 
the essential marks on cases for export. Consignees often ar- 
range their own symbols and they usually assume a variety 
of shapes. The marks should be legible so that they will not 
be blurred or effaced when the shipment reaches its final des- 
tination. Marks should either be stenciled, as required in 



228 EXPORTING TO THE WORLD 

making shipments to Chili, or painted. Marks by crayon, tags, 
or cards should not be used, for obvious reasons. Serial num- 
bers must be given to all cases. Duplication of numbers must 
be avoided as the customs officials may suspect that an at- 
tempt at fraud is being made. Neither should any number 
in a series be overlooked as the consignee may suspect that a 
case is missing. 

Accuracy in the marking and noting of the gross and net 
weights of cases so that it will correspond with the equivalent 
in the invoices and consular documents is absolutely essential. 
Consignee's marks, also, should tally with those in the ship- 
ping documents. Unless this precaution is taken the shipper 
may find that he is causing his customer considerable trouble 
as fines, delays and other inconveniences are the fruits of such 
negligence. 

Longshoremen are not easily persuaded to handle cases or 
other packages with care merely by such signs as glaring danger 
marks such as "handle with care," "glass," "keep in dry 
place," "this side up," etc. These phrases are generally use- 
less. The safe principle to follow is to properly pack goods at 
the factory, and if there should be a necessity for calling the 
attention of fragile goods to those who handle the cases 
warning phrases in English and in the language of the country 
to which the goods are destined should be written carefully 
on at least two sides of the cases. In some countries the gross 
and net weight of merchandise must be indicated in kilos. 



CHAPTER XV 

HOW SHIPMENTS ARE MADE 

Method of shipping goods from interior — Routine involved 
in shipment — Documents required— How bills of lading 
are made out shipowner's liability to the shipper con- 
SULAR invoices — Special regulations in various countries. 

The manufacturer whose factory is situated at some inland 
point experiences more difficulty in shipping his goods to the 
foreign customer than the manufacturer with his plant at the 
port of embarkation. The former requires an agent at the 
port to attend to the numerous shipping details, while the 
latter may personally see that his merchandise is properly and 
safely loaded into the ship. 

Let us trace the shipment of a manufacturer from an in- 
terior point to its destination. How may a manufacturer 
provide for the shipment of his goods to the port of embarka- 
tion, and what is the process to follow so that they may be 
safely placed on board the ship for transportation to some 
foreign port or, perhaps, to some inland point in a foreign 
country ? 

He may choose one of two ways. One method is to ship the 
goods on a through export bill of lading, and the other is to 
ship the goods on a local railroad bill of lading in care of a for- 
warding agent or a steamship company, or the manufacturer's 
own agent. When shipping goods on a through export bill 
of lading the railroad company instructs its foreign freight 
agent at the port to engage ocean freight space on the steamer. 
The foreign freight agent is supposed to attend to all the 
details in connection with the placing of the goods on board. 
The more important roads have foreign freight agents at the 
principal ports whose functions are to handle these matters. 

In shipping goods on a local railroad bill of lading, how- 
ever, the goods are consigned to some specific person, such 
as the foreign freight forwarder, a shipping company or the 

229 



230 HAFORTING TO THE WORLD 

manufacturer's own representative. It is the duty of the 
consignee to engage freight space on the steamer and to ar- 
range all other details in connection with the placing of the 
merchandise on board the steamer. The railroad's responsi- 
bility, moreover, ceases with the delivery of the goods at a 
stated place at the port. It is customary to send an "Arrival 
Notice" to the person who is to receive the shipment so that 
he may have ample time to arrange all details. 

There Should be no 
Delay in Shipments 

It should be remembered that a steamer usually calls at 
several ports along its route, and that goods are loaded into. 
the hold of the vessel in the order in which they are to be 
unloaded at foreign ports. For instance., a steamer making 
its first stop at Havana, Cuba, to discharge freight will load 
the merchandise destined for that port on the last day in 
which freight is received so that it may be at the top of the 
heap. When the steamer arrives in Havana the goods are 
unloaded without the necessity of "digging" into the hold 
after them. Again, if Buenos Aires is the last port of call the 
freight destined for that city will be found at the bottom of 
the hold. It would be necessary, therefore, for merchandise 
intended for Buenos Aires to be sent to the loading port on 
the date required by the steamship company which may be 
several days before the date of departure. Sometimes freight 
for the first port of call may be received on the day the 
steamer is scheduled to leave. 

The railroads will give full instructions regarding shipments 
for foreign destination. Manufacturers, especially those who 
are situated at inland points, can obtain all the necessary in- 
formation in connection with foreign shipments at the rail- 
road offices. 

Routine Involved 
in Shipment 

If the manufacturer is to rely on the foreign freight for- 
warder whose functions will be discussed later he need not 
bother about details in connection with his foreign shipment 



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U S. TREASURY DEPARTMENT 
Ci» :..n>. Can. No. 7525. 

T. V S5%9.- Form WTB 105 



(For United Slates Customs and War Trade Board.) 

SHIPPER'S EXPORT DECLARATION 

Of Merchandise Shipped to Foreign Countries or Noncontiguous Territories of the U. S. 

&T Clearance will not be granted until shipper's declaration has been filed with the Collector of Customs. 
U s Government export statistics are compiled from this declaration and must be correct. 



This space for use of Customs. 

„ . 6874263 

(Code No. Diet.) <P< 



(Place of original shipment) 



Goods shipped by .?.T^Supply Co. , 

(Name of actual shipper) 

Address 1 ?ro^way, New York, B.Y. From....?**.?! ^.?.?.. 1 * ; 

(Number) ' Vstreet) (City) < statel (Placeof 

Via St.L. &. M . and Erie For shipmen t on the... .?./?__»*»»»?• .. A . me . ri .° an .. 

'Carrier fr-m. mi - lor point if any) (Name of carrier. If vessel, give name, motive power, and flag if known) 

From lew .. y ork To uhimate fore ; gn destination Kob e , Japan. 

(U.S. Customs port of exportation) l c,t *' (Country) 





Number and 
kind of packages. 

e.g., 17 crates. 
40 boxes. 60 cases. 
76 bags, 90 barrels. 




COMMODITY 


War Trade 
Board Code 

Number 


Quantity 
(net weight only). 
State in standard ex- 
port units, as lbs., 
tone (of 2,240 lbs.), 
gallons, yards, 
bushels, barrels, etc. 


Value at time and place of shipment 


Marks and Numbers 


Describe the articles fully, as canned pork, printed 
cotton cloth, printing presses, apples, etc. General 
terms BUch as meats, dry goode, machinery, fruits, 
etc., will not be accepted. 

Read instructions on back. 


U. S. Products 

including foreign 

goods altered or 

remanufactured in 

the United States 


Foreign Products 
as imported 




NO 56 9 08 




r an.30 


9 

1. 191. 


DOLLARS 


ONLY 












R . M 


Twenty 


Face Cream 




1540 lbs. 


$605. 


88 


<fi) 


(20) 






240 doz. 






X/ 


Cases 












"44509 "" 














Kobe" 














#1/20 




































































Waybill or Manifest 


I Certify that above-described goods were shipped as stated herein except aa otherwise noted. 










' 





1, the undersigned, solemnly and truly declare that the above statement is a complete, just, and true account of all merchandise shipped by the 

party named; on board the vessel, car, or vehicle; and to the place or country named above; and that the description and quantity of each article is 

ed and that the values thereof are the actual costs or true market values at the time and placeof shipmentforexportation;Ifurtherdeclare 

of the merchandise described above is to be laden on any other vessel in port than that named above or transshipped on the high seas except 

ss iully stated above ; I further declare that none of said merchandise is shipped or to be delivered in violation of any of the provisions of the "Trading 

Nvith the Enemy" act, 

approved October e, 1917; that... ReizoMatsuoka, t of ?obe« Japan 

is the actual consignee of the said merchandise, and that if the shipment is made to a bank or other broker, factor, or agent, that 

, is the actual consignee on 



(Name) 

s account, the shipment is made, 
worn and subscribed to before' me 



.. J £5? a .?.y..2na._ 



191 



9. 



(Signature) . 
(Capacity)... Agent 



(Address) 

PRO FORMA 



.PRO EQRMA 

(Deputy Collector, notary public, etc. ) 

■ i 



(Member of firm, secretary, agent, e 

(Address).l Broadly.,.. New .York 

! and alt r-sk-d for .hi| silts to the Fa 



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3 



HOW SHIPMENTS ARE MADE 231 

at the port of embarkation. All that he is required to do in 
this case is to consign the goods to the foreign freight for- 
warder with the necessary instructions and the latter will do 
the rest. If, on the other hand, the manufacturer is to take 
the entire responsibility — such as engaging freight space, 
preparing the shipping documents, etc., — there is a certain 
routine that must be followed. It is something like this: 

Inquiry about rates among the steamship companies operat- 
ing lines to the ports for which shipments are intended must 
be made first of all. 

When a satisfactory rate has been obtained freight space 
must then be engaged. The steamship companies have their 
own individual rules regarding the booking of freight space. 
Information must be obtained from them. 

A Shipping Permit which instructs the receiving clerk at 
the steamship company's dock to accept freight of the shipper 
on a stated date is delivered to the manufacturer or agent 
when the freight space has been obtained. 

The Shipping Permit reads something like this: 

To the Receiving Clerk. 
S.S. "Imperial" 

PAN-AMERICAN STEAMSHIP CO. WHARF 
Pier North River 

RECEIVED FROM Smith Exporting Company 
Twelve (12) cases Typewriters 
To be delivered September 18-25 

It is to be understood that this engagement is on the con- 
dition that delivery shall be made promptly at the time called 
for in this permit or space will not be reserved, and the 
steamer and its agents shall be absolved from any and all 
liability arising out of the issuance of or under this permit, 
including any liability that may arise on account of the 
steamer's proceeding to sea without the goods. 

PAN-AMERICAN STEAMSHIP COMPANY 

Per ProForma 

New York September 15, 1919. 

A clause stating that all risk of loss or damage while goods 
are on the wharf is to be incurred by the shipper, etc., is 
written into the usual Shipping Permit. 



INSTRUCTION 

Re ad carefully to avoid delay at shipping point. 

I 

This form must be prepared in quadruplicate for all merchandise shipped to a foreign destination except shipments in transit 
through the United States from one foreign country to another and in duplicate for merchandise shipped between the United States 
and its noncontiguous territory. When merchandise is shipped foreign, four copies of this form must be presented to the collector 
of customs for each consignment. The collector will retain the original and one copy and deliver the other two copies to the shipper. 
The shipper will present, one copy to the steamship company and deliver the other copy with the goods to the inspector of customs 
on the dock without which no goods will be received. The copy delivered to the steamship company must accompany the goods on 
their voyage and be delivered by the master to the American Consular officer with the manifest at the port of discharge. The copy 
delivered to the inspector of customs upon which he will make his notifications of short shipment, etc., must be delivered to the 
■ vessel to be attached to the manifest delivered to the collector upon clearance. 

Export license number and date of expiration must appear immediately above goods shipped thereunder. 

The War Trade Board code number of the article given on the export license must be inserted after each commodity in the 
column following the description on the face of this form. .... .. .. , .-.- . , j 

If goods are to be delivered to other vessels in port or transshipped on the high seas, the articles, quantities, and values, and 
rDC a nd address of person, corporation, vessel, Government, etc., to whom transferred or delivered, must be stated on this form. 

1 Shipments from interior points for exportation. — If shipped on a through bill of lading, the shipper must prepare the 



orieinal export declaration in quadruplicate for foreign shipments and in duplicate for shipments between the United States and 
its noncontiguous territories and deliver forms to the carrier to accompany the shipping papers to the port of exportation. If 
shiDDed on a local bill of lading, the declarations may be attached thereto or mailed separately to the consignee at the seaboard, 
shipped on a loca i Dili c B, ^ declarati but ot the carrier's extract, in a sealed envelope ..addressed 

to the Collector "Customs with his name indorsed thereon and the fact of sealing noted on the declaration and deliver it with the 



extract to thecarrier If goods are consigned to an agent at the seaboard for transshipment and exportation the shipper may mail 

,h£ ft} a 3Mvaf» P ^^^ ■»* -mediately deliver the original declarations, sealed 

and unsealed, and [the carrier's extracts to the Collector of Customs who will retain the original and certify the extract and return 

it to the carrier vessel, or party named to attend to exportation. 

2 ExDOrtine vessel or carrier.— Care should be exercised in receiving goods destined for foreign countries or noncontiguous 
territories not accompanied by certified extracts or original declarations, as clearance wil not be granted until the export decla- 
rations hive been ; filed with the Collector. The copy must be attached to the vessel's manifest or car manifest or copy of waybill 

Whe yBlforeVci r ear e ance shall be granted Tor any vessel bound to a. foreign port, the owners, shippers, or consignors of the 
canroof such vessel shall deliver to the Collector manifests (or declarations) of the cargo or the parts thereof shipped by them 
respectively anfshall verify the same by oath. Such manifest (or declarations) shall specify the kinds, quantities, and values of 
ihe articles 'and the foreign port or country of destination. (See sec. 4200, Rev. Stats., U.S.) ...... ., 

If any vessel bound to a foreign port departs on her voyage without delivering manifest and obtaining clearance, the master 
or other person in charge shall be liable to a penalty of $500 for every such offense (See sec 4197 Rev. Stats., U S.) 

Similar provisions apply to exportations by rail, vehicle, or ferry. (See sec. 1, act March JIBW.) . 

4 The shipper must prepare this export declaration and sign the four copies and the oath be taken on the original before a 
customs officer notary, or other authorized officer. The declaration must be signed by the shipper, but the oath may be omitted on 
'hiomentsTo Canada or Mexico by car, vehicle, or ferry. If the declaration is executed by an agent for the shipper the authority 
musrbe in writing on this declaration or other document filed with the Collector. The values and names of shippers may be 
omitted from the copies to be delivered to transportation company, but must always appear on the original and the copy tor use 
ofWar Trade Board The original is for the use of customs officers and will be treated as confidential and information not dis- 
closed without written authority of the shipper or his agent. Export statistics are compiled from these declarations and all data 
required on the prescribed form must be furnished. . . . ..... 

5. Domestic articles exported.— The value of all articles grown, produced, or manufactured in whole or part in the United 
States must be stated in the column of "U. S. Products." .... . ,,,.•. j c-. . • .t. . .._j:.:„- 

6 Foreign articles exported,— The value of articles of foreign origin shipped out of the United States in the same condition 
as imported must be stated in the column of "Foreign Products." If foreign articles are subjected to any process of manufacture 
or alteration in the United States they become United States products and must be reported as such. Thus : Imported raw sugar 
refined in the United States should be reported as a domestic product. . 

7. The value of articles to be stated is the selling price or jfhe true market value at the tune and place of shipment tor expor- 

atl< 8' Description of articles exported must be accurate and complete. General terms such as dry goods, groceries meats, 
machinery, millinery, etc., will not be accepted. In the case of cheese the declaration must state whether filled or unfilled, oleo- 
margarine whether colored or uncolored, butter whether pure, adulterated or renovated. . „„■«„,, 

9 The kind of packages as boxes, barrels, etc., and the net weight exclusive of outer coverings, must be specified. 

10 The total quantity of each article expressed in the usual measure of pounds, tons of 2,240 pounds, yards, gallons, etc., musi 
be stated. Domestic spirits exported must be stated in gallons of 50 per cent alcoholic strength 

11. The country of final destination of goods-that ,s, the country to which goods are s °W-must be shown Sp^.al care 
should be exercised to state the final destination of goods shipped through Canada to Europe, and of goods to be transshipped in 
the United Kingdom, the Netherlands, Germany, and France en route to other countries „„„:<;,.-.,. „r „, lr ;,v 

12. Inspection certificates.-Process butter or butter adulterated or renovated must be accompanied by "rtificate of punty 
issued by the United States inspector of dairy products. Certificate of inspection must be.presented to the Collector for meat and 
meat food products exported when required by the regulations of the Department of Agriculture. ,_ mpr , A r,„ n - rtm . n , o( 

13. Export schedule B may be obtained free of charge from the Bureau of Foreign and Domestic Commerce, Department ot 
Commerce, Washington, D. C, and will be of much assistance to exporters. .„_. ,, .. „ „;,. of 

14 Saje and printing of blanks.-Shippers export declarations may be obtained from Collectors of Custom at the : price : of 
25 cents per block of 100. The export declarations may be printed by private parties proving they conform strictly to the official 
form in width, wording/color, and arrangement. 

. John Smith., 

To the Collector: I hereby authorize. 



address #1 Broadway, H eW YOrfc» to act as my agent for customs purposes in 

the exportation of the wlthm-describecTgoods. ~ Please deliver the certified duplicate accordingly 

PRO FORMA 

Shipper. 



232 EXPORTING TO THE WORLD 

Upon presentation of the Shipping Permit at the dock the 
drayman is given a Dock Receipt signed by the receiving 
clerk which serves as an acknowledgement of the receipt of 
the goods for shipment by the steamer. The Dock Receipt 
contains the weights and measures of the goods received. It 
is customary for the shipper to supply his own receipt forms 
when several deliveries are to be made to the steamer and 
against one Shipping Permit. When all the goods have been 
delivered at the pier the shipper may present these receipts 
which have been signed by the receiving clerk and obtain 
possession of the Dock Receipt which covers the details of 
each delivery. 

Having an acknowledgement in the form of a Dock Receipt 
from the receiving clerk that the goods have been delivered 
the shipper is now prepared to go through the formality of 
clearing the shipment through the custom house at the port. 
This must be done before the steamship company issues its 
formal bill of lading. Clearance involves the preparation of a 
Shipper's Export Declaration in which the following informa- 
tion is written: 

Name of steamer ; destination, marks and numbers of pack- 
ages ; the kind of goods contained in each ; value, etc. The 
description of the goods must be correct and if the shipper is 
unable to supply this specific information he should consult 
the official schedule of classification of goods which may be 
obtained from the Bureau of Foreign and Domestic Com- 
merce. The information given in the declaration must be ab- 
solutely correct as it is from these statistics that the govern- 
ments of the world compile their reports on commerce. 

The Shipper's Export Declaration must now be attested by 
either the manufacturer or some agent upon whom formal 
authority has been bestowed for this detail. 

Upon presentation of the certified Shipper's Export Declara- 
tion, the Dock Receipt, or other necessary papers including 
the bill of lading, at the steamship company's office the latter 
will be duly signed and turned over to the shipper. 

Principles of Steamship , 

Bill of Lading 

A bill of lading is a receipt for goods as well as a contract 



Port of DOfttinatioit-...~. 



Kob© 



tppl^Co* 



__, m to 3ail from the port of NEW YORK and bound for 

oe, or otherwise with liberty to substitute another steamer, or steamers, or to transship the goods 
.'n, and also with liberty to drydock with or without cargo on board, to proceed to and stay at any 
to to or beyond the port of discharge, once or oftener, in any order, backwards, or forwards, for load- 
nd all such ports - , places and sailings shall be deemed "to he included within the intended voyage (thi* 
r written or printed). 



fre&m 



■T7OTf-TBs; 



s«js-as-2 



- ; 



PAN -ASIAN 
STEAMSHIP COMPANY 



44 Whitehall Street. 
New York 



BETWEEN NEW YORK AND FAR EASTERN PORTS 



SHIPPERS MARKS & NUMBERS 



JKemuefc 



Port of OutlnaHon- 

,Z--..9-r..?j| l EP.l?.J?°L? 



1 by sny words la t 



" Twenty" t 2a) "CaWs -FS'ce"< ream 






4> 



IT IS ALSO MUTUALLY AGREED that this shipment is subjc 
the Act of Cong^ss of the United Suites, approved on the 13th d; 
and nothing in this Bill oi Lading shall operate to limit or deprive 
which he would, in the absence of the conditions and exceptions 
,V ACKEED that the value of the goods receipted 



44S09 

Kobe 

#1/20 



Twenty (20) Cases Face Ci'sam 



Export license 
#56908 



Export Declaration 
#6874263 



Notify ultimate consignee 
Reizo Matsuoka, 
Kobe , Japan 



= 



on board to*' ° c . **?. tf ' n * ehl P the eood» 
included within u,e intend,.,! vojaac 



■■irro~iBa.- 



i* & devtaU 

r their *sil t mj, Freight tor t 

tier ibid, have liberty to cot 






: , ,. if. 
iftrgei Incurred i 



^r}, p 5 0v i s,0n * ° f ', and al1 the exemptions trotn liability container; 
of February. l&W [and entitled, An Act Relating to Navigauon of Vcwels «c) 
» Shipowner or earner of any Statutory protection or limitation of .iiim 




either of uU courtei wdvLwble. 



', »hould clrcumttancef. la the opinion of the thlp 0wJ> Ot 4 the muter, render 






HOW SHIPMENTS ARE MADE 233 

to carry them. It is negotiable. When drawn to a shipper's 
own order or to a consignee it conveys ownership in the 
goods it represents. Hence, it requires the endorsement of a 
person in authority. The signature of a clerk is not sufficient. 

Bills of Lading are furnished by the steamship companies 
without charge usually. They are made out by the shippers. 
The number of copies that the shipper is required to prepare 
depends on the number he needs for his own purposes, and 
the number the steamship company and consular office may 
require. 

Not all steamship bills of lading furnished by the shipper 
are negotiable, however. Only the signed copies, usually two 
or three in number, are negotiable and these constitute what 
is called a "full set." Banks through which the customary 
documents are to pass generally require a full set of steam- 
ship bills of lading. Unless the bank has all these documents 
in its possession it has not the necessary title to the goods 
involved. A single bill of lading — negotiable — not in the pos- 
session of the bank eliminates the latter's security in the 
goods. 

The non-negotiable copies of the bill of lading may be used 
for the manufacturer's files or for the customer abroad. The 
steamship company will require at least one copy. The con- 
sular offices must be supplied with at least one copy as well. 

When Title to Goods 
Is Transferred 

Unless the consignee has paid cash in advance, or has 
furnished security of some kind to justify the transfer of 
an open account the bill of lading will not be made out di- 
rectly to the foreign customer. No experienced exporter is 
willing to give an importer title to the goods unless the latter 
has either made a settlement before the goods are shipped or 
furnished security of some kind to justify the transfer of 
title. When the shipper desires to ship the goods but retain 
title he makes the bill of lading out "to order." Not until the 
shipper endorses the bill of lading drawn after this fashion 
does title pass from one person to the other. Neither can any 
one obtain possession of these goods unless the bill of lading 
is properly endorsed by the shipper. 



234 EXPORTING TO THE WORLD 

It is permissible to insert a "Notify" clause on the margin 
of the bill of lading authorizing the steamship agents to notify 
the consignee of the arrival of the goods at the port of desti- 
nation.. The "Notify" clause simply reads : "Notify Smith 
and Co." or who ever happens to be the consignee. Title, 
however, is not transferred until the consignee is able to pro- 
duce a properly endorsed bill of lading which he may have 
obtained from the bank after a satisfactory disposal of the 
draft has been made. Or, he may have obtained a properly 
endorsed bill from the shipper himself. 

If the bill of lading is drawn to the order of the shipper 
then the latter must endorse it before title to the goods can 
be transferred. If the bill is drawn to the order of the con- 
signee the latter may obtain possession of the goods upon 
endorsing it. The shipper's endorsement in this case is not 
necessary. The formality of endorsement is necessary in the 
"full set" of bills of lading. 

How Bills of Lading 
May Be Endorsed 

Bills of lading may be endorsed either "specially" or "gen- 
erally." When endorsed "generally" the person in possession 
of the document is entitled to the goods. If the person claim- 
ing the goods is unable to produce a properly drawn bill of 
lading he may furnish a bond to the steamship company to 
protect it against any claims that might arise through the 
appearance of the rightful owner. It is not very often that 
occurrences like this are recorded, but in order to avoid any 
such situations the shipper should be very careful about his 
bills of lading. He should see that they are properly endorsed 
and directed to the proper persons. 

How Bills of Lading 
Are Made Out 

There are no uniform bills of lading. They vary in size, 
shape and color. The clauses contained therein are generally 
alike although in some instances there appear slight modifica- 
tions in order to comply with conditions or customs in certain 
countries. Some of these clauses protect the steamship com- 



TE OF CHILE IN UNITED STATES 



No s 

3 ESTADOS UnIDOS. 

STATES) 

Yorfe,.EJL„.2l5....D£...ABRlL.JD£L 191 .7* 

MlQJOdETAI I t^jCARTRtflfiEJOMPANX. I NC, 
m con destino al 

(DESTINED FOR THE PORT OF> 



MODEL OF INVOICE WHICH MUST BE FILED WITH GENERAL CONSULATE OF CHILE IN UNITED STATES 




No 

Consulaoo General de Chile en Los Estados Unidos. 



s 



(GENERAL CONSULATE OF CHILE IN THE UNITED STATES) 

Nueva Yorfe,.EL ja5....D.E...ABS.l.L.Il£L..„ 1 9 1 J£. 

3fartimt de las mercaderias despachadas t>or._IME...EEMJJNGJQJ!J.J>itMS-UNIM,,AlEiALL I c rARTPinr.r m MP/i[m mc 

(INVOICE OF MERCHANDISE SHIPPED BY) 

/.MME....OF-.STEAMER). - — _ „ .con destino al 

(DESTINED FOR THE PORT OF) 

.C.....SIEV.EfciSjQN....8c....CQ 



en Nueva York abordo del vapor 

(IN NEW YORK ABOARD THE STEAMER) 



puerto de VALPARAISO... CHILE.. 



de... 

(OF) 



...SANTIAGO. CHILE.. 



a consignation de. 

(TO THE CONSIGNMENT OF) 

jpor cuenta de... C.*....S.T£V£NS.0.MJ5cJLia.... 



valor total de la mercaderia 

(TOTAL VALUE OF THE MERCHANDISE) 



(FOR ACCOUNT OF) 



_..oro amertcano 

(AMERICAN GOLD) 



MARCAS 


NUMEROS 
(Numbers) 


BULTOS 
(Packages) 


CLASE 
(Class) 


CONTENIDO 
(Contents) 


; PESO TOTAL EM KILOS 

(Total weight in Kilograms) 


VALOR TOTAL OE CADA 


(Marks) 


NETO 
(Net) 


BRUTO 
(Grow) 


(Total value of each Item) 


/— -\ 


#100/102 


• 3 


CAJAS 


CARTUCHOS CARGADOS PARA 
REVOLVERES. 


223-45 


241.26 




(c.s. & c.) 








10000.- CALIBRE 32. 














10000.- CALIBRE 38. 








\^ y 


#103/HC 


8 


CAJAS 


CARTUCHOS CARGADOS PARA 


739.20 


620.78 




VALPARAISO 








ESCOPETAS. 
8000.- 16 GAUGE. 
8000.- 12 GAUGE. 










#111/11^ 


. 4 


CAJAS 


ARMAS DE FUEG0. 

20 RIFLES CALIBRE 22. 
20 ESCOPETAS .12 GAUGE. 


206.78 


264.84 


2 

X 
O 
< 








THE 


tEMINGTON (^^SumoN METAI 

Jlgr. 


LIC CARTRI 


)GE COMPANY lr> 


■-■15 

r VALUE OF 










Id 

as 
at 
< 
S 










^> 







X 

CO 
















s 
















THIS COLUMN 




SUMA 
(TOTAL). 






SUMA „ 
(TOTAL) 


1 







Consular Invoice Chilian form. Ml shipments to Chile must be accompanied by Consular Invoice. 



HOW SHIPMENTS ARE MADE 235 

pany against claims on the order and condition in which goods 
were shipped. Therefore, the clause reading "Shipped in 
good order and condition" applies only to the external con- 
dition of the cases or packages. Steamship companies are 
not presumed to know the condition of the goods within their 
cases, according to. court decisions the world over. 

The clause "quality, quantity, gauge, contents, weight and 
value unknown" is aimed to protect the steamship company 
against claims involved in the descriptions cited. However, 
the steamship company may be held responsible for damage 
to goods when such damage is not covered in the bill of 
lading clauses. For self protection, therefore, it is very care- 
ful in the matter of receiving goods in damaged cases or 
packages. When such packages have been received a nota- 
tion is made on the dock receipt as well as on the bill of 
lading. When this condition is reported on the bill of lading 
it becomes known as a "foul" bill. Bankers frown on "foul" 
bills because they are always susceptible to claims at the 
other end. Shippers should be very careful against permitting 
damaged packages to be sent. Instructions should be left 
with the receiving clerks to advise them whenever broken 
cases arrive at the dock so that they may be replaced and a 
"clean" bill of lading obtained. Sometimes, however, the 
steamship company may be induced to issue a "clean" bill 
even though it has received a number of cases or packages in 
a damaged condition. The steamship company in this case will 
require a "letter of indemnity" from the shipper, however, which 
shall protect the former against losses arising from claims at the 
port of destination. If these claims arise the steamship com- 
pany will settle and later recover from the shipper. Letters 
of indemnity are attached to the steamship company's bill of 
lading. 

The Shipowner's Liability 
to the Shipper 

The shipowner must see that the ship is seaworthy at the 
beginning of the voyage. It must be free from defects of any 
kind. If an accident occurs on the high seas and it is due to 
a defect that existed before the steamer left port the ship- 
owner will be liable for all damage "to merchandise. If, how- 



236 EXPORTING TO THE WORLD 

ever, an accident occurs after the ship leaves port, and was 
not due to some defect that existed before the ship left port, 
the shipowner is free from liability. 

Size of Packages 
Required in Shipment 

Some steamship companies issue Parcel Receipts to cover 
packages of a limited size and of small value. These command 
a very small freight rate. The feature of these Parcel Re- 
ceipts lies in the opportunity that the consignee has of ex- 
amining and showing samples of goods shipped by the same 
vessel on regular bills of lading. Consignees are often able 
to sell their stock from the samples while the cargo is still 
being unloaded. Parcels having a small value may also be 
shipped under a Parcel Receipt although restrictions as to size 
and value are made by the steamship companies. Packages 
measuring more than 3 to 5 feet will rarely be accepted. 
Neither shall they be valued at more than $50. Parcel Re- 
ceipts, moreover, do not cover the steamship company with as 
much responsibility as the bill of lading. 

Consular Invoice 
in Foreign Trade 

A consular invoice, regarded by many manufacturers and 
exporters as a nuisance, is a document in which the details of 
an invoice must be accurately stated, and presented and sworn 
to by the shipper or his representative in the consulate of the 
country to which the goods are to be sent. All the important 
foreign countries maintain consulates in the principal Ameri- 
can ports. Some consulates require two copies, others five 
or six or eight. It depends on the regulations of each in- 
dividual country. Consular invoices may be obtained at the 
consular offices for a nominal price. Each country has its 
own regulations in connection with the charges made for 
certifying consular documents. Consular invoices are re- 
quired for large shipments only and not for parcel post pack- 
ages, excepting in the case of one or two Latin American 
countries. 

The lack of uniformity in consular regulations affecting 



GEO L SQUIER MFG COMPANY 



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Republica del Ecuador 

Factlffa Consular de las mercaderias que por cuenta deL-JLQS_Sr.iS.JiOE0_ L SQUIER MFG COMPANY 

cfcJttyiYOMUWDAD rerniL EN ^JL Sr._..B VISNOLO _deIpuertode 

SUAYAQyiL a hndo del VAPOR " ADVANCE " suCapitan 



proce 



:dente de New York, con destino a GUAYAQUI L ECUADOR 



cuyo va 



ilor es de $.._M3.»25_...__, equivalentes a S/. _i9.9j-.5P_... JJn sucre igual a $0.50. 



MARCAS 


NUMEROS 


BULTOS 


CLASE 


C N T E N 1 D 


Peso Bruto 

»n Kilogramos 


Peso Neto 

en Klloerjmos 


VALOR 

an Oolares 


B 
V 


1/2-1 1/12 


t. 


CAJAS 


MAQUINAS PARA LA INOUSTRIA 


710 


52M 


i+95 


25 


GUAYAQUIL 


TOTAL 


u 


CAJAS 




710 


52U. sj m 


25 



New York. 1Q DE MAYO DE... | 9 , ? 

Derechos recaudados: 

No. IB %4£M DolaresV^ 



Consular Invoice, Ecuaderian form. While Consular 
in the method of drawing up Consular Invoices as an exan 




El infrascrito Consul General de la Republica del Ecuador 

certifica la factura precedente de- — .'-..."....' Bultos con el peso 

de— '— II.U.'. Kilogramos, presentada en 5 ejemplares iguales 

P orJJiS S r.£S..CALDlELLij:(3_AGENTES 

New York,_.MAy_ 2 2 4S1S 



Consul General. 



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HOW SHIPMENTS ARE MADE 237 

shipments to Latin America has been the subject of consider- 
able criticism of late. This problem has received much con- 
sideration at all the international conferences of American 
states, and resolutions have been passed recommending the 
adoption of a uniform consular invoice, the abolition of cer- 
tificates of origin, consular certification of bills of lading, and 
the reduction of the consular fees as far as possible to amounts 
necessary to cover the cost of maintaining the consular serv- 
ice. These reforms still remain to be adopted. 

There is justification, however, in the requirement of the 
presentation of consular invoices in connection with the clear- 
ance of shipments to various countries on the ground that it 
facilitates the compilation of commercial statistics, prevents 
undervaluation and fraudulent entries, and supplies the funds 
to maintain the consular service. 

With the exception of three countries in Latin America — 
Argentine, Costa Rica and Uruguay — the rest require presen- 
tation of consular invoices for the clearance of shipments. 
Failure to comply with this requirement will provoke a heavy 
penalty in certain countries. In other countries importers are 
allowed to clear their shipments without the consular docu- 
ments, but are obliged to furnish a bond for their subsequent 
presentation. It is important, therefore, for the shipper to 
forward the consular documents by the same steamer in which 
the goods are being sent to protect the consignee against fines 
or delays.. 

Contents of 
Consular Invoice 

While there are some differences in consular invoices to 
foreign countries the following information is generally re- 
quired from the shipper: Name of shipper, vessel, captain, 
consignee, and port of destination ; mark, number, and weight 
of each package, character of packing employed, number of 
packages, contents value. 

Description of the contents must be in detail. It must Be 
absolutely accurate. Information must be given in connection 
with the component material, and, in case of fabrics, detailed 



LEY DE ADUANA 

Art. 67. — Cuando los Administradorcs de Aduanas observaren que el valor 
real de las mercade^s enumeradas en la factura consular es evidentemente 
mayor que el declarado en clla, pondran este hecho inmedialamente en conoci- 
micnto del Jurado de Aduanas, para que este, plenamcntc comprobado el 
hecho, y con audiencia del interesado imponga como pena el quintuplo de la 
cantidad que, por efecto de la falsa declaracion, se pretendio defraudar por 
derechos de certificacion. El valor que se debe declarar es el de la mercaderia 
en el lugar de* origin. 

Los Consules que, al certificar una factura encontraren notable diferencia 
entre el 'valor respectivo y el declarado, haran prcsente tal circunstancia al 
embarcador; y si este insistiere en el despacho, certificaran la factura y, por 
el correo inmediato prtvendran de lo ocurrido al Administrador de la Aduana 
correspondiente al puerto hacia el cualva dirigido el cargamento En caso de 
litigio entre el vendedor y el importador aquel no podra demandar a este sino 
por el valor declarado en la factura consular. 

Art. 71.— Si al recibir el importador la factura consular encontrare algun 
error en las declaraciones o pesos que puedan ocasionarle penas podra evitarlas 
presentando el Gobeernador de la Provincia, dentro de los primeros seis dias 
habiles de haber llegado el cargamento, una solicitud por triplicado indicando 
taK ^ EfTores y pidiendo que autorice el reconocimiento prcvio dc los bultos que 
necesiten este requisite t 

El Gobemador, hara dejar copia de ella, certificada por su secretario, en 

y decretara al pie dc 
lercaderias, ordenando 
d al Administrador de 
tardar al dia siguiente 

los bultos respectivos en presencia suya, 
que designara paTa cada caso, y firmara con estos 
do. Uno de los ejcmplares quedara en puder del 
el Administrador al Ministerio de Hacienda y el 



> que para el efecto se llevara en la Gobe: 
dicha solicitud que se proceda al reconocimiento dc las : 
que un ejemplar se remita al Ministerio de Hacienda, ot 
Aduana y que el tercero se devuelva al solicitante, a ma: 



del In 
el 



inistrador hara 
tor y de un Vis: 

icnto por triplii 
otro 1( 



Interve 

tercero se enlregara al importador para que lo acompaiie a su pedido, que debe 
ser igual reconocimiento, pedido que el Administrador ordenara sea despachado 
por otro Vista Si del reconocimiento rcsultarc que no liuho tal error en la factura 
consular, o que las declaraciones o pesos estuvieren con formes a lo declarado en 
ella, se cobrara al interesado un recargo de 10% sobre los derechos del bulto o 
bultos que motivaron la tramitacion anterior. 

Para el reconocimiento expresado en este articulo la aduana cobrara: 5 
centavos por cada bulto del mismo conteriido, cuando estos sean de tal natur- 
aleza que no fuere necesario abrirlos para saber su contcnido o cuando el peso 
total de una partida se puede verificar pesando una parte de ellos; 20 centavos 
por cada bulto, cuando siendo del mismo contenido, sea preciso reconocer y 
pesar cada uno, un sucre por bulto, cuando sean de diverso contenido. 

Art. 72.— Cuando un comerciante no pudiese manifestar por menor sus 
mercaderias, por falta de factura o conocimiento del contenido dc los bultos, 
podra pedir al Administrador, dentro del termino de 120 dias, contados desde la 
llegada del buque, "que el interventor y un Vista formen la factura mediante 
el pago de cinco a cien sucres ; remuneracion que senalara el Administrador segun 
la importancia del trabajo. El Administrador hara despachar los bultos asi 
facturados con un Vista distinto del que formo la factura, la que no destruye 
la factura consular. Si al llegar esta se encontrare diferencia entre lo que con- 
tenian los bultos y lo declarado en la factuar consular, se cobrara un 25% de 
recargo y para el efecto, la solicitud debe ser garantizada. 

Art. 108.— En los articulos formados de diversas mercaderias, se pracficara 
el aforo por la dominante.^ Se entiendo por materia dominante, la que entrando 
en mas de cincuenta por ciento en los componentes de un articulo, dctermina su 
naturalcza, o la que, en las telas cubre su superficie. 

Art. 110.— Si los pesos resultaren en la Aduana dfstintos a los declarados 
en el pedido se cobrara 50% de recargo sobre los derechos correspondicntcs 
cuando el exceso del peso fuere de 157c o mas que el declarado; pero si el exceso 
fuere menor, o el peso inferior al declarado, se cobrara por lo que resulte. 

Art. 113.— Todo tulto manifestado por mayor y no entrcgado a la Aduana 
por el buque hasta treinta dias despues de su llegada, sera aforado de con- 
formidad con la factura consular; y sus derechos servicios c impuestos cobrados 
por la Aduana al Agente o consignatario del buque. 

Todo bulto cntregado por el buque con su contenido robado parcial o total- 
menie, sera aforado como de contenido pleno y los derechos, servicios e im- 
yuestos de lo correspondiente a la falta seran cobrados por la Aduana al Agente 
o consignatario del buque. 



Declaracion 
r e m i t e n 



Servicio Consular 
Ecuatoriano 



COLON PANAMA __ 
20 DE MAYC DE 1919 



ADVANCE 



Vapor 

Nacionalidad AMERJC W*A. 

NUEVA YORK 

CIUOAD 
GUAYAQUIL 
ECUADOR 
Refute THE GEO L SQU I ER MFG COMPANY 

NlfVA YORK CIUOAD 

VIGNOLO 



Lugar del embarque .... 



Lugar del destino 




Consignato 



SR 
GUAYAQUIL ECUADOR 



Valor < 
Valor t 



M1J5 



9M.50 



Las facturas deberan ser presentadas a inas tardar 
hasta 6 horas antes de la salida del vapor 6 buque, 
segun anuncio oficial de la compania, de lo contrario 
tendran el recargo del derecho adicional correspon- 
diente. 

Las facturas deben ser pagadas y retiradas al 
siguiente dia despues de habcr sido entregadas en la 
seccion, Exportacion del Consulado y hasta dos horas 
antes de la hora oficial anunciada para la salida del 
buque. 

No 6e permite escribir entre lineas. 

Ni hacer enmendaturas ni borrones. 



Nota— T o d o s los 
claros de estos form- 
ularios deben ser Ilena- 
dos por los interesados, 
quienes pueden dirigirse 
al Consul para cualquier 
duda. 



LEY DE ADUANA 



DERECHOS CONSULARES 

Toda importacion en el tcrritono dc la Republics 
del Ecuador requiere, para su despacho en las aduanas 
nacionales, la prcsentacion de una factura consular que 
cxprcse: a) los nombres del rcmitentc, del consigna- 
tario, dc la cmbaracaci6n y su capiian, la bandera del 
barco y el lugar dc destinacion; b) cl valor total de las 
mercaderias comprendidas en la factura; c) las marcas, 
numeros y niimero del bulto; d) las clases de los 
mismos; por cjemplo; fardos, cajas, barrilcs, etc.; e) 
cl peso bruto y neto, en kilos, dc cada bulto separada- 
mente 6 de varios bultos juntos, siempre que contengan 
la misma mcrcaderia; /) su contcnido, prccisando la 
clase de mercaderias, sin usar terminos generates, 
tales como lanas, algodoncs, fcrrcterias, etc. Las 
facturas consularcs deben cstar rcdactadas en espahol 
y lirmadas por sus rcmitentcs 6 representantcs en e\ 
puerto dc embarque. 

Tanto las facturas consularcs como los sobordos 
y las listas de encomicudas seran extendidos en cinco 
cjemplares igualcs, todos los cuales seran prescntados 
para la certificacion consular, antes de que la embar- 
cacion a que se refiercn hubiera salido del puerto. 
debiendo el Consul dcvolver un original, firmando de 
su puno y letra al embarcador y armador, respectiva- 
mente. 

Los consules ecuatonanos cobraran los siguicntes' 
derechos' 

Por certificacion de facturas consulares hasta el 
valor de cien sucres, un quinto de condor, sea dos 
sucres 6 su equivalente. 

Por certificacion de facturas cuj-o valor exceda de 
cien sucres, tres por ciento sobre el valor declarado. 

Por certificacion de sobordos, cuarcnta por ciento 
sobre el valor total dc las rccaudacioncs por facturas. 
Por certificacion de listas de encomiendas, veinti- 
cinco centavos de Sucre por cada encomienda. 

Por certificacion dc declaraciones refercntes a 
factura consular, sobordos, listas dc encomiendas, etc., 
un condor, 6 sean diez sucres. 

Por certificacion de patcntes de sanidad, un condor, 
6 sean diez sucres. 

Cuando las facturas, sobordos, listas de encomien- 
das fucren prescntados despues de haber salido la 
embarcacion a que se rcficren, sc cobrara por su 
legalizacion, ademas dc los derechos ya expresados, 
los siguicntes derechos adicionales; por facturas, uno 
por ciento mas; sobordos, diez por ciento mas; por 
listas de encomiendas, diez centavos de Sucre mas por 
cada una. 



NOTA.— Un condor vale t 
EI sucre (S/.) esta dividido 
Valencia del sucre: $0.50 oro. 



sucres," 6 sea $5.00. 
cien centavos. Equi- 



238 EXPORTING TO THE WORLD 

information is usually required as to length, width, finish, and 
thread count. A separate consular invoice is required for 
each consignment, and in most cases for each mark, even when 
constituting part of a consignment. 

The language of the country of destination should be used 
wherever possible although in some countries invoices in 
English are permissible. Consignees who do not understand 
English, however, may be compelled to have translations 
made, which is quite an expense in itself. 

How Consular 

Fees Are Determined 

Consular fees involved in the certification of invoices are 
determined by the value of the shipment, excepting in a few 
cases. They range from $1 per set of invoices, regardless of 
the value of the shipment, to 6 per cent of the invoice value 
on some shipments. Some countries require certification of 
bills of lading, in others no fee is charged for this service. 

Special Regulations 
in Certain Countries 

In some countries like Colombia and Venezuela "to order" 
shipments are prohibited. In the case of Venezuela, for in- 
stance, "to order" shipments are subject to a surtax of 25 
per cent of the duty, in addition to the penalty imposed on the 
master of the vessel carrying the shipments. This regulation 
prevents foreign exporters from financing their shipments to 
those countries by the method of "draft attached to docu- 
ments which is customary in business transactions with other 
countries. Shipments to these countries where "to order" 
documents" are prohibited must be consigned direct to the 
consignees who may obtain possession of the goods without 
the formality of accepting the drafts. The only way to give 
a bank control over goods in these countries, to be paid for 
on arrival, is to name the bank the consignee, and at the same 
time instruct it to turn over the goods to the importer upon 
the payment of the draft. 



HOW SHIPMENTS ARE MADE 239 

American manufacturers and exporters should not take any- 
thing for granted in the matter of making out consular in- 
voices and preparing them to meet the requirements of 
foreign countries. They should ask for instructions from 
their foreign customers who are presumed to know the chang- 
ing regulations of their own country better than the stranger, 
and what is more important, the American manufacturers and 
exporters should religiously follow them. This should keep 
them out of trouble. 

Other Documents in 
Foreign Shipments 

The tariff laws of certain countries involve two columns 
of duties. In one of these columns is contained a general 
duty and in the other, which is called "the most favored na- 
tion column," is the duty applying to products of nations with 
whom special treaties exist. A Certificate of Origin is 
necessary in order to take advantage of the lower rates in- 
volved in "the most favored nation" column. This certificate 
of origin must certify that the goods are the product of one 
of the exporting nations involved in the treaty, and it must 
accompany the goods to port of destination. 

"No Dumping" certificates are required in certain British 
colonies such as Australia, New Zealand, South Africa and 
Canada. These certificates are aimed to prevent the dumping 
of goods in these colonies at a price lower than the cost of3 
production. The shippers must certify that the invoice prices 
are the customary prices obtainable in the country of their 
origin. 

Where there is a difference in the prices or discounts at 
home from the export figures two sets of figures are required, 
one in a column called "home consumption" and the other 
called "export" prices. 

The following summary statement is given showing in 
tabular form the most important requirements relating to 
consular documents. 



240 



EXPORTING TO THE WORLD 



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CHAPTER XVI 

THE FOREIGN FREIGHT FORWARDER 

Foreign freight forwarder must be well informed — For- 
warder SHOULD HAVE HIS OWN WAREHOUSES HOW FOREIGN 

FREIGHT FORWARDER OPERATES METHODS DIFFER ON THE ATLAN- 
TIC side — Large concerns use freight forwarders — What 

FORWARDER CHARGES FOR HIS SERVICES ADVANTAGES OF FREIGHT 

FORWARDERS — CRITICISM AGAINST FORWARDING BUSINESS. 

The Foreign Freight Forwarder is a handy man. 

Without him hundreds of manufacturers would be forced to 
attend to their own shipments at the port of loading, but with 
him the work of loading merchandise on ships and supervis- 
ing its proper movement at the port is made easy. Without 
him manufacturers at inland points would of necessity have 
to appoint agents at the seaports to handle the routine of 
placing goods on board the ships. 

W. J. Riley, Export manager of the Judson Freight For- 
warding Co., of New York City says this about Foreign 
Freight Forwarders: 

"A freight forwarder is one who is able to handle in every 
detail any kind of a shipment from any point in this country 
to any point in any other country, which can be reached by 
any form of recognized transportation. 

"A forwarder is in business because the requirements of 
business have created him. His services are sought for the 
same reason which impels a man to hire a plumber when he 
has a leaky faucet, or to employ a doctor when he is sick. The 
point is that the forwarder is a specialist in his line, just as 
truly as any tradesman or professional man is a specialist in 
his vocation. 

"He must know, or be able to find out very quickly, what 
articles our government will permit to be imported. If there 
are any restrictions, he must know the character and extent 
of such limitations and how to overcome them. 

243 



244 EXPORTING TO THE WORLD 

Foreign Freight Forwarder 
Must be Well Informed. 

"He must know all about permits, licenses and declara- 
tions which are required and how to obtain them. He must 
have a thorough knowledge of all banking requirements and 
collection facilities in this country and other countries; he 
must be able to quote instantly approximate figures and quick- 
ly to quote actual figures of cost to handle a shipment of any 
commodity from point of origin to final destination, including 
all of the elements which form a part of that cost. 

"He must know all about the various kinds of insurance 
covering Marine, War, Theft, Pilferage, Loss and Damage, and 
be able to quote cost of average against these risks. 

"He must know the customs regulations at home and 
abroad, as well as the most favorable trade routes at different 
seasons and under varying conditions, in order that the 
promptest, most economical and most satisfactory service 
may be secured not only for the consignor in this country, 
but for the consignee in a foreign country. 

"In short, a Forwarding Agent must know everything in 
connection with transporting a shipment which the shipper 
does not know, and which he cannot learn without incurring 
a greater expense than the cost of the forwarder's services. 

"Having stated what a forwarder must know, it follows 
that he must be able to translate his knowledge into service. 
Otherwise, his service which is all that he has to sell, would 
be useless as the wisdom of an astronomer in toting a hod 
of bricks. 

"He must make prompt, complete and courteous replies to 
all inquiries, and must anticipate the shipper's needs and 
provide him with shipping instruction blanks to be filled out 
to meet all possible emergencies. 

Forwarder Should Have 
His Own Warehouses. 

"He should be able to immediately place insurance with any 
insurance company named by the shipper or to arrange for 
such insurance under a blanket policy which every up-to-date 
forwarder provides for immediate use. He must maintain 



THE FOREIGN FREIGHT FORWARDER 245 

his own warehouse or have warehouse connections to take 
care of goods at assembling points and at ports of exit pend- 
ing shipment. He must make all arrangements to comply 
with custom house and consular requirements. 

"The Forwarder must secure and book steamship space for 
each individual shipment; and in many cases, he must con- 
tract such space in advance for the protection of, and in antici- 
pation of, the needs of his patrons. 

"He must maintain offices manned by experts who are 
capable of attending to every detail in connection with clear- 
ing shipments from port of exit. In many cases, this involves 
the work of locating cars in railroad yards and shipments in 
freight houses and warehouses, and in seeing that they are 
moved at the proper time to the docks, and cleared on the 
steamer for which booked. 

"He must not only maintain offices in United States ports 
of exit, but he must have agents or representatives in the 
principal ports and cities of all foreign countries. 

"He must have banking credit and facilities for discounting 
drafts when required and for making collections at foreign 
destinations. 

"In order to take care of the prepayments of rail and ocean 
charges which are demanded by railroads and steamship com- 
panies pending reimbursements on the part of the shipper, 
the Forwarding Agent must have a considerable amount of 
invested capital." 

How Foreign Freight 
Forwarder Operates 

The actual operation of a Foreign Freight Forwarder 
through the various ports of the United States is described by 
Mr. Riley. He says: 

"As the methods of handling shipments via the Pacific differ 
somewhat from the methods via the Atlantic and Gulf ports, 
it may be well to describe these conditions briefly and separ- 
ately. 

"Consignments to Australia or the Orient are, with few 
exceptions, handled on thru bills of lading, covering rail and 
ocean movement from point of origin to final destination. 

"To enoy the proportional rail export rate and other bene- 



246 EXPORTING TO THE WORLD 

fits of these thru bills of lading, it is necessary that every 
consignment shall be contracted for and booked in advance 
with a steamship line. 

"A rail permit must be obtained and the shipment must 
then be made within the limits prescribed by railroad regula- 
tions, namely, from twenty-five to thirty days from Chicago 
territory, and from thirty to thirty-five days from eastern 
territories prior to the scheduled sailing of the steamer on 
which the shipment is booked. The permit number must be 
shown on the initial line of the bill of lading. 

"These thru export bills of lading are not, as might natural- 
ly be expected, made by the railroads, but are made up by the 
forwarder at his own expense. The railroad company fur- 
nishes the blanks ; the forwarder fills them out in every detail 
including shipping permit numbers, order numbers, descrip- 
tive markings, and every item and condition necessary to make 
a complete document. On nearly all Trans-Pacific shipments, 
it is necessary for the forwarder to make up from twenty to 
twenty-five copies of each lading. The shipper usually re- 
quires two or three originals and several non-negotiable 
copies for his own use; the other copies are required by the 
railroad and steamship companies and also for the use of the 
forwarding agents at port of exit and for custom house pur- 
poses, etc. 

"As soon as possible after the shipment moves from point 
of origin copies of the bill of lading and full instructions as 
to steamship bookings are mailed to the agent of the forward- 
ing company at port of exit, who then takes care of the cus- 
tom house requirements, checks up the shipments to see that 
they are brought down to the docks and placed on the boat. 
The forwarder's agent at port of exit then advises the home 
office of particulars of clearances, which are, in turn, com- 
municated to the shipper. 

Methods Differ on 
The Atlantic Side 

"As is generally known, railroad companies do not issue 
thru bills of lading covering export shipments via Atlantic 
Coast ports. The rail movements and the ocean movements are 
handled separately. On less than carload lots, it is not abso- 



THE FOREIGN FREIGHT FORWARDER 247 

lutely necessary to make advance steamship bookings al- 
though it is desirable to have these bookings made when- 
ever this is practicable. These LCL shipments must, of 
course, be warehoused between the time of arrival at New 
York and departure of steamer. 

"Carload lots require the issuance in advance of a G. O. C. 
permit, which permit is not issued until after a firm booking 
has been made with steamship company and evidence sub- 
mitted that this has been done. This permit specifies the dates 
within which the shipment must be made. Notice of arrival 
of cars is furnished to the forwarder's agent at the port, who 
arranges for prompt transfer to the loading dock. 

"The steamship companies furnish blank bills of lading to 
the forwarder, who makes up, at his own expense, all neces- 
sary copies to comply with the requirements of the shipper, 
the banks, the steamship companies, customs house, etc. This 
entails issuance of from fifteen to twenty copies of each 
steamship bill of lading. The forwarder's agent at port of 
exit sees that all the papers controlling or concerning the ship- 
ment are mailed on the boat which carries the freight or on 
some fast mail steamer which will reach the consignee as 
early or earlier than the goods will arrive at destination. 

"The forwarder's agent at the port advises the home office 
of clearances, which are in turn communicated to the shippers. 

Gulf Port Shipments 
Same as Atlantic 

"Shipments via Gulf ports are handled practically in the 
same way as via the Atlantic. It might be stated at this 
point that the question of having railroads issue thru bills 
of lading from point of origin to destination via Atlantic and 
Gulf ports is now having serious consideration. The consensus 
of opinion is that arrangements for such thru bills of lading 
will be made in the near future." 

Large Concerns Use 
Freight F orwarders. 

Larger concerns that have their own export organizations 
are accustomed to employ the services of the Foreign Freight 



248 EXPORTING TO THE WORLD 

Forwarder, declares Mr. Riley. "The reason for this," says 
Mr. Riley "is that the forwarder's connections and dealings are 
so wide and cover so many different fields of operation, bring- 
ing him into contact with cargo or so-called tramp steamships 
as well as with all of the regularly established lines, that he 
can frequently offer facilities to the big industrial companies 
which their own organizations do not cover. 

"The forwarder, thru his agents and correspondents in 
foreign countries, is able to obtain particulars of manufac- 
tured articles and materials for which there is a market in 
foreign countries. These opportunities are submitted to the 
forwarder's customers, who are thus enabled to increase their 
business and frequently are placed in a position to open up an 
entirely new field of trade. Many merchants and manufac- 
turers of this country have received their first foreign ordera 
thru the information originally furnished by the forwarders, 
and these orders were subsequently retained by the services 
of the forwarder." 

What Forwarder Charges 
For His Services 

Every Foreign Freight Forwarder has his own price. Rate 
cards vary. 

While rate cards show charges for packages of various 
weights to all the principal ports of the world it must be 
remembered that these charges are generally subject to 
change. Circumstances often govern the size of the bill from 
the Foreign Freight Forwarder. 

In figuring up his charges the Foreign Freight Forwarder 
takes these points into consideration : 

(a) The port of destination. 

(b) The volume of other shipments going to the same 
port. 

(c) Volume and character of the individual shipment. 
The Foreign Freight Forwarder depends on the prices he 

can obtain for the shipment of goods on a combination ship- 
ment which otherwise would be subject to a steamship com- 
pany's minimum charges. 

Here is the way the plan works out : 
* Twenty different manufacturers having goods to ship for 



THE FOREIGN FREIGHT FORWARDER 249 

the same destination abroad are clients of the Foreign For- 
warding Agent. Each one of these manufacturers has a 
shipment weighing half a ton each. The ocean freight rate 
at the point of destination is $50 per ton and the steamship 
company has a minimum charge of $50. Therefore, if any 
one of these manufacturers undertook to ship his half ton of 
merchandise alone the freight would cost him $50. In order 
to reduce the cost, however, these manufacturers have ar- 
ranged with the Foreign Freight Forwarder to ship all their 
goods on one bill of lading so that the combined shipment 
would weight ten tons and command a $50 rate or a cost to 
each manufacturer of $25 per ton. The Foreign Freight For- 
warder then may charge each manufacturer about $35, and 
even with this added charge each manufacturer effects a 
saving of $15 on freight. 

The Freight Forwarder's principal source of revenue comes 
from these freight charges although he makes minor charges 
for bills of lading, and other things such as cartage, insur- 
ance, etc. 

Advantages of 
Freight Forwarders. 

Aside from being almost indispensable to inland shippers 
in the preparation of combinations of small shipments Foreign 
Freight Forwarders will perform the service of sending goods 
forw r ard "freight collect" when steamship companies require 
payment in advance. The Forwarding Agent pays the freight 
charges in advance and instructs his correspondent abroad to 
make the collection from the consignees. Foreign Freight 
Forwarders will also send goods C. O. D. with instructions to 
their correspondents to make collections. 

Foreign Freight Forwarders sometimes advertise the fact 
that they discount manufacturers' drafts on foreign customers. 
Operations of this sort are confined solely to a few large con- 
cerns that have a sufficient amount of capital to undertake 
such banking functions. As a matter of fact Foreign Freight 
Forwarders in offering to discount manufacturers foreign 
drafts merely discount them with some foreign exchange 
banker and then charge the manufacturer a small amount for 
their trouble. Most assuredly, they first obtain a full report 



250 EXPORTING TO THE WORLD 

of the manufacturer's financial standing before offering to 
discount his paper. Foreign Freight Forwarders are not 
bankers in principle, and unless there is a specific reason 
manufacturers and exporters should have their drafts hand- 
led through institutions whose chief functions are to handle 
operations of this character. 

The extent of service offered by Foreign Freight Forward- 
ers varies a great deal. Some forwarders despatch shipments 
to all parts of the world while others have only a limited field. 
Some excel in the service rendered in certain sections of the 
world than in others. The domination of a certain territory 
by a Foreign Freight Forwarder often results in favorable 
quotations on freight. 

The wise manufacturer who wishes to have his goods ship- 
ped to a foreign country through a Foreign Freight Foi- 
warder will ask for quotations from a number of them. In 
this way he can obtain the best terms, and possibly a distinct 
service to suit his particular needs. There are plenty of 
Foreign Freight Forwarders to be found in the principal 
American seaports. The idea is to seek the competent one. 

Criticisms Against 
Forwarding Business 

Like any other business there are abuses that creep into 
the profession of Foreign Freight Forwarding that must be 
guarded against. The shipper can protect himself against 
these abuses if he follows the principle that his obligation to 
the consignee is not ended until the goods have been actually 
placed in his possession. The shipper should know if his cus- 
tomer is entirely satisfied with the manner in which his goods 
were sent. This is not often done. For instance when Foreign 
Freight Forwarders ship goods to a foreign correspondent 
they send a "Way Bill" at the same time with instructions as 
to the various packages consigned to his care. These foreign 
correspondents are ordinarily instructed to either collect 
their own charges from consignees or to send the bill to the 
forwarder in this country. The latter method gives the manu- 
facturer or shipper a chance to see what the expenses at the 
other end were. The former method, however, keeps the 
shipper in the dark and he knows nothing of the charges made 



THE FOREIGN FREIGHT FORWARDER 251 

to the consignee unless he makes an inquiry. Sometimes 
these charges are exorbitant, and the customer may not like 
it. This has been the cause of considerable complaint on the 
part of shippers. 

Sometimes, a Foreign Freight Forwarder is very slow in 
making his shipments to out-of-the-way places. For instance, 
if a forwarder received a consignment of merchandise to be 
shipped to some island in the Orient he would wait until he 
had received other shipments to the same point to make a 
saving. This often causes considerable delay and frequently 
conies up in the freight forwarding business ; and it is the clever 
and experienced forwarder who usually can make proper 
combinations to avoid any possible delay for his client. 
Manufacturers are entitled to prompt and economical service. 
The functions of the Foreign Freight Forwarder are to render 
such service. 



Chapter XVII 

MARINE INSURANCE 

History of "Underwriters?' — Principles of Marine In- 
surance — What is written in Marine Insurance Policy — 
Explanation of clauses in marine insurance policy — How 

MARINE INSURANCE IS TO BE TAKEN OUT GENERAL AND PAR- 
TICULAR AVERAGE IN MARINE INSURANCE. 

Marine insurance is the oldest insurance in the world. 

The early traders who braved the perils of the Mediterranean 
in the early centuries recognizing the necessity of protecting 
their investment against the perils of the seas, worked out some 
form of insurance, the principle of which is still contained in 
the present marine insurance policy. 

Rome knew of marine insurance. Loans were made in those 
days in security of ship and cargo which was repayable only 
if the ship returned to port safely. These loans commanded 
high rates of interest, and were a favorite form of investment 
among the wealthy Roman speculators. 

Modern insurance may be said to have begun in the 13th 
century in Flanders and Portugal where maritime commerce was 
at its height in that period. The Lombard merchants, also, 
adopted marine insurance to protect their ships and cargoes 
against the perils of the seas in those days. It is believed the 
Lombards introduced marine insurance into England in the 
16th century where it has flourished ever since. It is said that 
three-fourths of marine insurance is taken out in Great Britain. 
The business is mostly in the hands of stock and mutual com- 
panies as well as associations of underwriters, the oldest and 
chief of which is Lloyds. The large shipping companies insure 
their own vessels by keeping a book account as insurance, and 
charging the losses against a certain percentage of the earnings. 

The American colonies were introduced to marine insurance 
early in the 17th century, although the majority of maritime 
shipments from the colonies was covered by insurance in London. 
By the middle of the 19th century most of the business done 
by American companies was on home risks. It is said that 
previous to the War over half of the marine insurance, and two- 



MARINE INSURANCE 253 

fifths of the premiums went to American branches of foreign 
concerns. 

History of 
"Underwriters" 

Perhaos, the pioneer insurance company of the world today is 
the Corporation of Lloyds which does business to this day prac- 
tically along the same lines as 200 years ago. Lloyds orig- 
inated from an informal gathering of marine insurance men 
at a popular coffee house established in London by Edward 
Lloyd as early as 1692. From these informal meetings grew 
an association of marine insurance underwriters, and later the 
Corporation of Lloyds which now consists of over 400 mem- 
bers, was formed. 

A risk in Lloyds is usually assumed by a number of in- 
dividuals. The British shipper who wishes to have his vessel 
insured gives full particulars of the risk on a memorandum 
which is passed around to the members of Lloyds for their 
consideration. Those desiring to assume a portion of the 
risk place their initials on the slip together with the figures 
indicating the portion of the total value for which they accept 
the responsiblity. When the entire risk is covered a formal 
policy is prepared, and this becomes the actual marine in- 
surance policy. It is then signed by the individuals who ac- 
cepted shares in the risk. This is called "underwriting." 
While marine insurance underwriters flourish in England it is 
to be remembered that they do not control the business of 
that country. There are hundreds of companies that assume 
the entire risk just like they do in the United States where 
the practice of underwriting marine insurance has become 
obsolete. 

Principles of 
Marine Insurance 

When the shipper sends goods by rail from one interior 
point to the other he need not insure his shipment because 
the railroad ordinarily assumes the responsibility but when he 
sends his goods out of the country by water he must then take 
out marine insurance if he wishes to protect his shipment 
against loss. Steamship companies are exempt from all forms 



254 EXPORTING TO THE WORLD 

of liability excepting loss or damage arising from negligence, 
improper loading, stowage or delivery of merchandise. All 
other risks must be assumed by the shipper or the consignee 
of the goods. In order to cover these risks they must take 
out marine insurance. 

Marine insurance is primarily intended to cover only mar- 
ine risks. The shipper must show that loss or damage was due 
to perils encountered on the high seas. Marine insurance 
policies do not cover loss from other causes such as deteriora- 
tion of perishable goods, breakage, leakage and robbery, or 
poor packing. The term perils of the sea does not cover 
every accident or casualty which may happen to the mer- 
chandise on the high seas. It must be a peril of the sea. In 
1887 Lord Herschell said: "It is well settled that it is not 
every loss or damage of which the sea is the immediate cause 
that is covered by the words, 'perils of the sea/ They do not 
protect, for example, against that natural and inevitable action 
which results in what may be described as wear and tear. 
There must be some casualty, something which could not be 
foreseen as one of the necessary incidents of the adventure. 
The purpose of the policy is to secure an indemnity against 
accidents which may happen, not against events which must 
happen." 

What is Written in 
Marine Insurance Policy 

Very few persons ever take the trouble to read the contents 
of a marine insurance policy. Exporters should become thor- 
oughly familiar with it even though many of its clauses have 
become obsolete. Perhaps they are reluctant to peruse a solid 
mass of type that is difficult to read and often necessitates a 
magnifying glass to make it out. 

Here are a number of clauses to be found in a marine in- 
surance policy: 

"This policy shall not be vitiated by ajiy unintentional 
error in description of voyage or interest or by deviation of 
the vessel from the voyage described, provided the same be 
communicated to assurers as soon as known to the assured, 
and an additional premium paid if required. 

"Beginning the adventure upon the said goods and mer- 



MARINE INSURANCE 255 

chandise, from and immediately following the loading thereof 
on board of the said vessel, as aforesaid, and so shall continue 
and endure until the said goods and merchandises shall be 
safely landed as aforesaid, AND it shall and may be lawful 
for the said vessel, in her voyage, to proceed and sail to, 
touch and stay at, any ports or places, if thereunto obliged by 
stress of weather, or other unavoidable accident, without 
prejudice to this insurance. The said goods and merchandise, 
hereby insured, are valued (premium included) at not more 
than $100,000 by any one vessel. 

''Touching the adventures and perils which the said in- 
surance company is contented to bear, and takes upon itself 
in this voyage, they are of the seas, fires, jettisons, barratry 
of the master and mariners, unless the assured on cargo be 
in part owner of the vessel, and all other perils, losses and 
misfortunes (illicit or contraband trade excepted in all cases) 
that have or shall come to the hurt, detriment or damage of 
said goods, and merchandises, or any part thereof. 

"And in case of any loss or misfortune, it shall be lawful 
and necessary to and for the assured, his or their factors, 
servants and assigns, to sue, labor and travel for, in and 
about the defence, safeguard and recovery of the said goods 
and merchandises, or any part thereof, without prejudice to 
this insurance; nor shall the acts of the assured or insurers, 
in recovering, saving and preserving the property insured, 
in case of disaster, be considered a waiver or an acceptance of 
abandonment; to the charges whereof, the said insurance 
company will contribute according to the rate and quantity 
of the sum herein insured ; having been paid the consideration 
for this insurance by the assured, or his or their assigns, at 
and after the rate of as per endorsement hereof. 

"And in case of loss, such loss to be paid in thirty days after 
the proof of loss, proof of interest, and adjustment exhibited 
to the insurers (the amount of the Note given for the premium 
if unpaid, and all sums due to the Company from the assured 
when such loss becomes due being first deducted, and all sums 
coming due being first paid or secured to the* satisfaction of 
the insured), but no partial loss or particular average shall in 
any case be paid, unless amounting to five per cent. 'Provided 
always, and it is hereby further agreed, that if the said assured 
shall have made any other insurance upon the property afore- 



256 EXPORTING TO THE WORLD 

said, prior in day of date to this Policy, then the said insur- 
ance company shall be answerable only for so much as the 
amount of such prior insurance may be deficient towards fully 
covering the property hereby insured. 

"And the said insurance company shall return the premium 
upon so much of the sum by them insured as they shall be by 
such prior insurance exonerated from. And in case of any in- 
surance upon said property subsequent in day of date to this 
policy, the said insurance company shall, nevertheless, be 
answerable for the full extent of the sum by them subscribed 
hereto without right to claim contribution from such sub- 
sequent insurers. And shall accordingly be entitled to retain 
the premium by them received in the same manner as if no 
such subsequent insurance had been made. Other insurance 
upon the property aforesaid, of date the same day*as this pol- 
icy, shall be deemed simultaneous herewith; and the said in- 
surance company shall not be liable for more than a ratable 
contribution in the proportion of the sum by them insured 
to the aggregate of such simultaneous insurance. 

"It is also agreed, that the subject matter of this insurance 
be warranted by the assured free from" loss or damage arising 
from a riot, civil commotion, capture, seizure, or detention or 
from any attempt thereat, or the subsequences thereof, or 
the direct or remote consequences of any hostilities, arising 
from the act of any government, people,, or persons whatso- 
ever (ordinary piracy excepted), whether on account of any 
illicit or prohibited trade, or any trade in articles contraband 
of war, or the violation of any port regulation, or otherwise. 
Also free from loss or damage resulting from measures or 
operations incident to war, whether before or after the decla- 
ration thereof. 

"In the event of risk of war being assumed by endorsement 
under this policy, the assured warrant not to abandon in case 
of capture, seizure or detention, until after the condemnation 
of the property insured ; nor until 90 days after notice of said 
condemnation is given to this company. Also warranted not' 
to abandon in case of blockade, and free from any expense in 
consequence of detention or blockade; but in the event of 
blockade, to be at liberty to proceed to an open port and 
there end the voyage. 

"Memorandum. It is also agreed, that bar, bundle, rod, 



MARINE INSURANCE 257 

hoop and sheet iron, wire of all kinds, tin plates, steel, mad- 
der, sumac, brooms, wicker-ware and willow (manufactured or 
otherwise), straw goods, salt, grain of all kinds, rice, tobacco, 
Indian meal, fruits (whether preserved or otherwise), cheese, 
dry fish, hay, vegetables and roots, paper, rags, hempen yarn, 
bags, cotton bagging, and other articles used for bags or 
bagging, pleasure carriages, household furniture, skins and 
hides, musical instruments, looking glasses, and; all other 
articles that are perishable in their own nature, are warranted 
by the assured free from average, unless general ; hemp, tobac- 
co stems, matting and cassia, except in boxes, free from aver- 
age under 20 per cent., unless general ; and sugar, flax, flaxseed 
and bread, are warranted by the assured free from average 
under seven per cent., unless general; and coffee, in bags or 
bulk, pepper, in bags or bulk, free from average under ten per 
cent., unless general. Profits warranted free from claim for 
general average, but subject to the same per centum of partial 
loss as if the insurance were on goods. In case a total loss of 
profits be claimed, the underwriters to be entitled to a credit 
of the same per centum of salvage as if the insurance were on 
goods, and in case of contribution in general average for any 
portion of the goods at the customary sound value, this com- 
pany to be free from claims for loss of such portion. Not 
liable for loss arising from wet, breakage, leakage, or ex-: 
posure of goods shipped on deck. 

"Warranted by the assured free from damage or injury from 
dampness, change of flavor, or being spotted, discolored, mus- 
ty or moldy, unless caused by actual contact of sea water with 
the articles damaged, occasioned by sea perils. In case of 
partial loss by sea damage to dry goods, cutlery, or other 
hardware, the loss shall be ascertained by a separation and 
sale of the portion only of the contents of the packages so 
damaged, and not otherwise ; and the same practice shall ob- 
tain as to all other merchandise as far as practicable. Not 
liable for leakage on molasses or other liquids, unless oc- 
casioned by stranding or collision with another vessel. 

"Warranted by the assured that this insurance shall not 
enure directly or indirectly to the benefit of the carrier or 
other bailee, by stipulation in bill of lading or otherwise, and 
any breach of this warranty, and any act or agreement by the 
assured, prior or subsequent hereto, whereby any carrier, or 



258 EXPORTING TO THE WORLD 

party liable for or on account of loss of or damage to any 
property insured hereunder, is given the benefit of any in- 
surance affected thereon, 'shall render this policy of insurance 
null and void. 

"In case of any agreement by the assured, prior or sub- 
sequent hereto, whereby any right of recovery of the as- 
sured for loss or damage to any property insured hereunder, 
against any person or corporation, is released, impaired or 
lost, which would on acceptance of abandonment or payment 
of a loss by this company, have inured to its benefit, but for 
such agreement or act, this company shall not be bound to 
pay any loss, but its right to retain or recover the premium 
shall not be affected. 

"Warranted by the assured, that the assignment of this 
policy or of any insurable interest therein, as also that the 
subrogation of any right thereunder to any party, without the 
consent of this company shall render the insurance affected 
by such assignment or subrogation, void/' 

The foregoing clauses are found in Marine Insurance policies 
for occasional shipments only. Details of a given shipment 
are usually written in these policies. Regular shippers, how- 
ever, insure under "open policies," meaning that they cover 
all shipments for a stated period or to a specified value, against 
which each individual shipment is "declared" as it is made, 
and Certificate issued. 

Explanation of Clauses 

In Marine Insurance Policy 

"Beginning the adventure upon such goods and merchandise 
from the loading thereof aboard said ship" found in the or- 
dinary marine insurance policy is usually amended to read 
"including risks of craft to and from the ship or vessel, each 
craft to be considered a separate risk." This amendment is 
necessary in order that the plain policy may apply before the 
goods are actually placed on board the vessel. There is great 
risk in loading vessels from lighters or barges, and this makes 
the amendment necessary for full protection under the in- 
surance policy. 

"Thefts" refer to thefts by violence only. Petty thievery or 
pilfering by crews or stevedores are not included under 



MARINE INSURANCE 259 

"thefts," The former must be covered by a special contract 
but an increased premium is required in such cases. An im- 
porter cannot make a claim against losses by petty thievery 
or pilfering by crews or stevedores unless he is covered by 
contract and has paid the extra premium. The matter of 
seeking this protection rests with the importer. He is the 
better judge whether he can run the risk of losses from these 
sources or pay the extra premium. When a merchant falls 
victim to the wiles of expert pilferers he naturally makes a 
claim against the carrier. He is promptly met with a denial 
of responsibility on the ground that the bill of lading merely 
calls for the delivery of so many packages "said to contain" 
merchandise, and that the carrier has no evidence to prove 
that the packages contained the goods stolen from them. 
Unless his insurance policy includes a clause providing for 
protection against such losses even the insurance company 
will turn him down. 

"Jettison" means the throwing overboard of a part of a 
cargo or part of the equipment of a ship. 

"Barratry of the master and mariners" means the wrongful 
and wilful act committed by the master or crew to the preju- 
dice of the owner or charterer of the ship. Mutiny on board 
ship is barratry. Barratry is not as common nowadays as 
it used to be. 

A "warranty" means that the assured undertakes the obli- 
gation of doing or not doing a particular thing, or that some 
condition shall be fulfilled, or whereby he affirms or negatives 
the existence of a particular state of facts. 

The "memorandum''" is included in marine insurance policies 
in order to secure a minimum limit to the underwriter's liabil- 
ity for damage to perishable articles. 

Special Risks May be 
Covered by Contract 

A marine insurance policy does not cover all risks. A con- 
tract must be written in these policies whenever a special risk 
is required to be covered. For instance, cargo carried on deck 
commands usually a double rate for insurance than if it were 
carried under deck. When a premium for such risk is paid 



260 EXPORTING TO THE WORLD 

the clause "Including the risk of jettison and washing over- 
board" is written into the insurance policy. 

Protection against war risks requires a separate insurance 
policy in each case. These special policies are necessary, of 
course, only during war times. Little use was made of them 
during the Spanish-American war but when the European 
war broke out their use became imperative. 

Some of the clauses in a certificate of insurance against 
war risks only, are these: 

"This insurance covers only the risk of capture, seizure or 
destruction or damage by men-of-war, by letters of mart, by 
takings at sea, arrests, restraints, detainments and acts of 
kings, princes, and people authorized by and in prosecution of 
hostilities between belligerent nations; but excluding claims 
for delay, deterioration and or loss of market and warranted 
not to abandon in case of capture, seizure or detention, until 
after condemnation of the property insured, nor until sixty 
days after notice of said condemnation is given to this com- 
pany. Also warranted not to abandon in case of blockade, and 
free from any claim for loss or expense in consequence of 
blockade, or of any attempt to evade blockade, but, in event 
of blockade, to be at liberty to proceed to an open port and 
there end the voyage. 

"Warranted covering while waterborne only and excluding 
any risk on land. 

"Warranted no German, Austrian or Turkish ownership, 
interest, consignee or destination ; and warranted free of con- 
demnation on the ground of such ownership, interest, con- 
signee, or destination. 

"On shipments to neutral countries in Europe it is war- 
ranted that the bills of lading shall show the name and ad- 
dress of the neutral consignee. " 

It is to be noted that higher premiums are demanded when 
merchandise is shipped in steamers owned by belligerents than 
those owned by neutrals. During the European war British, 
French, Russian, Italian or Japanese steamers were subject 
to a high war risk insurance owing to the activity of German 
submarines. There was no war risk insurance to be had on 
German, Austrian or Turkish steamers because they were 
driven completely from the high seas soon after the war 
started. 



MARINE INSURANCE 261 

"Warranted covering while water borne only and excluding 
any risks on land" on a war risk insurance policy means that 
war risk will be assumed while the property is actually on 
the water. 

Government Bureau of 
War Risk Insurance 

By Act of Congress in August, 1914, there was established a 
Bureau of War Risk Insurance in the United States Treasury 
Department which was empowered to issue only insurance 
against risks of war. Congress appropriated $5,000,000 for the 
operations of the Bureau. Within a year, however, the Bu- 
reau showed a large profit. The law under which the War 
Risk Insurance operated provided that protection should be 
confined strictly to vessels and cargoes owned by American 
interests, and the following clause was inserted in all cargo 
policies: "Warranted that the title to the property insured 
remains continuously in citizens of the United States during 
the term of this policy." 

Kinds of Protection* 
Now Obtainable 

The shipper who wishes to pay the premium may receive 
almost any sort of protection nowadays from the marine in- 
surance companies. All that is required is the inserting of 
a special clause covering the particular risk to be covered sub- 
ject, of course, to the approval of the underwriters. These 
clauses generally known as riders, are affixed to the regular 
policies. Shippers can be covered by these clauses against 
damage to goods while en route from inland point through to 
inland point of foreign country by rail, steamer, etc. They 
can be\ protected against fire, theft, leakage, breakage, earth- 
quakes, or tidal waves. 

How Marine Insurance 
Is to Be Taken Out 

Shippers should always demand instructions from their 



262 EXPORTING TO THE WORLD 

customers as to the kinds of insurance protection desired as 
the latter must pay the bill in the end. It is up to the customer, 
therefore, to explain what he wants in the way of insurance and 
what he is willing to pay for it. In quoting c.i.f., however, 
manufacturers should always be careful that they accurately 
describe the kind of insurance proposed and included in the 
c.i.f. prices. When goods are shipped through Foreign Freight 
Forwarders it is usually the custom to instruct how and for 
much to insure. Export commission houses attend to their 
own insurance without waiting for instructions. It is the 
manufacturer who does his own shipping, however, who must 
be careful that this important matter is attended to and never 
overlooked. 

The safest thing to do is to see that the insurance com- 
pany covers all risks from the moment the goods leave the 
factory until they actually reach the foreign customer. Some- 
times, there are delays in clearing the goods at the custom 
house in a foreign country. It is a w T ise thing to allow a 
margin of about 20 or 30 days so as to have full protection 
up until the time they actually reach the consignee. The 
matter of insuring for land risks as well as sea risks should be 
taken up with the customer, however. He may not desire to pay 
the higher premium unless he knows what it is actually about. 
When he is convinced of the virtue of such a policy he will read- 
ily agree to pay. 

How Insurance 
Brokers Operate* 

There are Marine Insurance brokers to be found in all the 
principal ports of the United States. Export commission 
houses and large manufacturers usually employ the services 
of insurance brokers because they are in constant touch with 
conditions in the marine insurance business which gives them 
an advantage of being able to obtain not only lower rates but 
additional features of protection. 

Insurance brokers derive their income from commissions 
awarded to them by the insurance companies. These com- 
missions range anywhere from 2V2 per cent to 5 per cent. 
Brokers are in very close touch with all marine insurance 



MARINE INSURANCE 263 

companies. They understand their policies and their practices 
thoroughly. 

General and Particular 
Average in Marine Insurance 

Partial losses sustained in the shipment of merchandise by 
sea are known by the name of average. According to Ben- 
jamin Rush, President of the American Foreign Insurance 
Association, particular average is the damage resulting to 
the subject matter one has insured, such as the bale of goods 
being damaged by water, or the mast being carried away in 
a storm. "General Average," says this same authority, "re- 
quires the act of man. It is the oldest law of commerce in 
existence. It came into existence in the Island of Rhodes, 
over 2,000 years ago. This is the way it came up : In those 
days ships were very small, propelled by one sail or oars, and 
the merchant accompanied his goods. Frequently a storm 
would come up, and the only way to save the lives of those 
on board was to jettison some of their merchandise, and every 
merchant would say : 'You throw overboard my friend's goods 
and leave mine here/ This involved disputes, of course, and 
many valuable lots of merchandise were sunk and many men 
drowned because of those occurrences. Finally they came to 
the conclusion that if one man's goods were thrown overboard 
they would all chip in and pay their proportionate share. In 
other words, that which was sacrificed by one would be paid 
by the contributions of all. It has got to be the voluntary 
sacrifice by the act of man to avert a threatened peril at 
sea, and it has got to be successful at least in part. When it 
occurs everybody chips in his proportionate share of the loss, 
the man who lost his particular merchandise chipping in his 
contribution also. Every man gives alike. Then if your mer- 
chant is insured he goes to his underwriter and says : T have 
suffered a general average loss of two or five or ten per cent 
on my goods; pay up. And on practically every policy, unless 
it is written free of all average, you get whatever proportion 
it is insured for." 

This definition means that an exporter who loses his goods 
by general average must also pay his share of the loss as 
well. This liability for a contribution to general average is 



264 EXPORTING TO THE WORLD 

justified by the common law. If the shipper has not protected 
the goods he is shipping by a marine policy that covers general 
average he is the loser. The shipper or the rightful owner of the 
goods will be notified in due course that he is subject to 
assessment to meet general average costs. If a marine in- 
surance policy protects him he has only to notify his under- 
writer and the latter will take care of this matter. 

The "York-Antwerp" rules framed in a conference of ship- 
owners, merchants, and underwriters many years ago in the 
cities of York and Antwerp serve as the basis for determin- 
ing what general average losses really are. Bills of lading 
usually contain a provision providing that general average 
adjustments shall be made under these rules. In the absence 
of this provision, however, the laws of the country to which 
the ship is bound govern these adjustments. 

General average contributions are justified when voluntary 
sacrifices of property or expenditures are made for general 
safety. They must be reasonably made. The cutting of masts 
spars, sails or rigging for common safety in a storm is ad- 
mitted under general average as well as the throwing over- 
board of merchandise for safety. Cargo damaged by water 
used to extinguish a fire on board is protected under general 
average. 

Particular average practically means partial damage. The 
British law has this to say about particular average : "Where 
the whole or any part of the goods or merchandise insured 
has been delivered damaged at its destination, the measure 
of indemnity is such proportion of the sum fixed by the policy 
as the difference between the gross sound and damaged values 
at the place of arrival bears to the gross sound value." 

The proceeds realized from the sale of damaged goods 
represents the damaged value of goods. 

The market value of the goods had they arrived at port of 
destination sound, as taken on the day of sale of the damaged 
goods represents the sound value of the goods. 

The difference between these two values represents the de- 
preciation of loss and this rate of depreciation is applied to 
the insured value of the damaged goods. 

A close study of the marine insurance policy will show that 
the clause called the "memorandum" exempts insurers from 



MARINE INSURANCE 265 

a certain percentage of loss. It is provided in this clause that 
certain goods are free from particular average unless the 
damage amounts to a certain specified percentage. These 
percentages vary in a great number of marine insurance policies. 

Insurance With 
Particular Average. 

When goods are susceptible of being damaged through rough 
handling or by contact with water, insurance with particular 
average is taken out. Insurance with particular average is 
generally taken out in the shipment of textiles or other mate- 
rials likely to be damaged. In instances where goods are 
usually considered free from particular average from their 
very nature, and in the absence of specific instructions the 
shipper covers them F.P.A. the consignee should always give 
full instructions as to covering his shipments. Unless he does 
this misunderstandings are likely to arise. In the memoran- 
dum of the insurance policy quoted in this chapter it is seen 
that a long list of articles are named as being free of par- 
ticular average. Some of these articles, however, such as 
hardware would be damaged if wet by sea water. Unless the 
importer is protected with particular average he would have 
to bear the entire loss. 

Open Marine 
Insurance Policies 

Large shippers do not like to be bothered by taking out 
regular marine insurance policies whenever they have ship- 
ments to make. A short-cut in this routine is effected by tak- 
ing out Open Policies. These Open Policies cover risks up 
to a certain amount of money, provide for all contingencies 
against which protection is desired such as theft, breakage, 
fire risks, etc., and at a fixed premium. These Open Policies 
are good only for a certain length of time or until their values 
have been entirely exhausted. When the shipper prepares to 
send merchandise overseas he notifies the insurance company, 
covers for a certain value, gives the name of the steamer, and 
the date of departure. The open policy is endorsed and a 
certificate of insurance is sent to the shipper. The terms of 



266 EXPORTING TO THE WORLD 

the original are not written on the certificate of insurance 
although it has the full force of the regular marine insurance 
policy. 

Declaring Values 
Under Marine Insurance 

Under a marine insurance policy no proof of value is re- 
quired. Under fire insurance the actual value of the goods 
destroyed must be proven. If a person insures his store for 
$10,000 under a fire insurance policy, and it is destroyed by 
fire, an adjuster will endeavor to place the damage at a figure 
below the insured value. In marine insurance, however, if a 
shipper insures for $50,000 and the ship is lost, he will get 
$50,000. This is the difference between marine and fire in- 
surance. The insured value is the indemnity value in case of 
total loss. In case of partial loss under a marine insurance 
policy a comparison of the damaged value and the sound value 
with the insured value determines the amount of loss. 

A value greater than the actual value of the goods is gen- 
erally declared for marine insurance. This is done in order to 
cover incidentals such as freight, cartage, etc. As a matter 
of fact a shipper can declare almost any value under a marine 
insurance policy as long as he is willing to pay the higher 
premium. 

Cost of Premiums Vary 
For Marine Insurance 

The nature of the goods to be insured, the character of the 
ship transporting them and the port of destination determine 
the premium. Policies covering merchandise shipped to Eu- 
rope during normal times do not command as high a rate as 
policies covering merchandise shipped to South American 
ports. The flag flying on the mast of a ship does not change 
the rates. 

In connection with marine insurance rates Mr. Benjamin 
Rush who has already been quoted in this chapter says this : 

"I am aware that the idea of the general public regarding 
the way insurance rates are made is that a few insurance 
company officials, who are absolutely devoid of conscience, 



MARINE INSURANCE 267 

get together once in so often, and agree to charge just as high 
rales as they think they can get out of a patient and long- 
suffering public. 

"If it were possible to get up a monopoly on such a perfectly 
liquid subject as insurance, possibly this might be done, but, 
as a matter of fact, it is not possible, and consequently the 
conception which I have just stated is entirely erroneous. 

"It must always be remembered that there are two ends to< 
every transaction of international commerce — one, let us say 
in the the United States, and one, say in some foreign country. 

"If, therefore, an underwriter in the United States fixes his 
insurance rates too high, the merchant instructs his consignee, 
or the shipper, as the case may be, to place his insurance in 
some foreign company and country. 

"There are literally hundreds of marine insurance com- 
panies, and members of Lloyds in every maritime country in 
the globe, and since the dawn of Marine Insurance I have 
never heard of anybody being skillful enough to combine them 
into what is principally known as the Trust ; therefore, any- 
body who knows how to write, and has the price of a three 
cent stamp, can avail himself of the competition of the whole 
insurance world upon his own individual business. 

"Furthermore, the laws of the various states of the United 
States are so drawn that it is possible for citizens with a 
small amount of capital, say from $100,000 to $200,000 to or- 
ganize an insurance company and obtain a state charter. 

"Therefore, just as soon as the margin of profit on marine 
insurance operations rises above a fixed minimum marine in- 
surance companies are organized to compete with those pre- 
viously established. 

New companies 
Enter field 

"A very good example of the latter is to be found in the 
last three years when the large amount of business resulting 
from war conditions and the profits made on war insurance 
induced a number of American fire insurance companies, 
which had not hitherto written marine "nsurance, to enter the 
marine field, and which also induced a number of foreign 



268 EXPORTING TO THE WORLD 

companies not hitherto operating in America to establish 
agencies in the United States. 

"Also, many new insurance companies were chartered and 
established both in the United States and abroad. 

"I think it is safe to say that the marine insurance capacity 
of the United States market has been doubled by this means 
since 1914. There is at present, I believe, ample insurance 
capacity to take care of American marine insurance require- 
ments, and it is to be hoped certainly from the merchants' and 
shipowners' point of view that this large capacity will be main- 
tained and increased, because it is a guarantee against rates for 
marine insurance being unduly high. 

"As a matter of fact, over a series of years, taking good 
years with bad they are not high. 

"I should say from my own experience that in a period of from 
20 to 30 years any company which could show an average 
profit year in and year out, of say five per cent of its business 
tnrn over, which five per cent would also include the in- 
terest on its invested funds, would be doing remarkably well. 

"Now as regards the apportionment to hazard between man 
and man, every marine insurance company keeps what is 
known as a classification system, the purpose of which is to 
show on what branches of its business it is taking or losing 
money. 

"This classification is divided into several hundred sub- 
divisions or book accounts, so that the profit or loss in any 
given branch of the business can be followed up promptly, and 
necessary rate adjustments made. If, for instance, a classifi- 
cation showed that on trade with England, the insurance 
company was losing money, and that on trade with Brazil it 
was making money, the insurance company would be put on 
notice to increase its rates to England, and if its profits to 
Brazil were unduly high some competitor, who also kept a 
classification, would not be very long in forcing it to reduce 
rates to that country or lose its business. 

"Also an account is usually kept of the premiums received 
from, and the losses paid to, each ship owner or merchant. 

"Degrees of business abilities of different firms differ con- 
siderably. It is a usual occurrence to find merchants in the 
same trade operating with varying degrees of profit to them- 



MARINE INSURANCE 269 

selves and to their underwriters. This is also taken into con- 
sideration in the making of rates. 

"A cargo on any given vessel on any voyage may well con 
sist of several hundred different kinds of merchandise, each 
subject to various susceptibilities of damage, and it is the 
business of the insurance underwriter to see that his insurance 
rate is adjusted accurately to those hazards for each par- 
ticular kind of cargo shipped, for every voyage, and by every 
kind of conveyance, and to all the various hazards which are 
generally lumped under the head of marine perils and which 
are changing continually. 

"As an illustration of the amount of bookkeeping necessary 
to enable a marine underwriter to correctly adjust his rate 
to hazard incurred, I would like to say that some years ago 
the company of which I am president employed a firm of ex- 
pert accountants to go over our accounting and classification 
system with the idea of introducing improvements, and they 
reported that they had just finished performing a similar 
service for the United States Steel Corporation, and they were 
considerably surprised to find that in order to achieve the 
results desired it was necessary for us to have a considerably 
larger amount of bookkeeping than did the United States Steel 
Corporation, although our turnover at the time was, say, $10,- 
000,000, and the steel corporation's turnover very many hun- 
dreds of millions. 

"Unless the underwriter adjusts these rates accurately to 
these changes and conditions, one of two things happens. If 
he fixes his rate too high, a competitor comes along and takes 
his business. If he fixes it to low he loses mfoney, and if he 
keeps on long enough, he will have to retire from business. 

"With a marine underwriter, therefore, it is a matter of 
literal business life to see that his rates are on the whole 
correctly gauged to the hazard run. 

"If he fails to do so, he is very speedily eliminated from 
the field of competitive insurance, but even if he succeeds in 
doing all that I have outlined hitherto, in order to turn in a 
satisfactory balance sheet at the end of the year, he has got 
to be a good deal more than a mere keeper and observer of 
accounts. 

"The way the marine underwriter makes his money is by 
taking the business which has been operating at a loss, find- 



270 EXPORTING TO THE WORLD 

ing out the cause of that loss, and eliminating' it. By doing 
this he can for possibly a year or two, until his competitor 
finds out his method, obtain a fair share of profit upon a given 
trade. 

"I can cite as an instance in point, the insurance of the live 
animals between this country and Europe, where by the ini- 
tiative of private underwriters a saving of some six cents on 
every dollar of value on such exports was secured to American 
shippers and producers of cattle. The saving to the con- 
sumer, in the course of years ran into hundreds of millions of 
dollars, and a business which had been insured at a loss at a 
rate of seven per cent, ultimately was insured at a profit, at 
a rate of one quarter per cent. 

"Another illustration which occurs to me, was the insurance 
of merchandise to Australia, where there had been a very bad 
run of fires on shipboard for several years, which fires were 
ultimately traced to the shipment of some oil clothing that 
had caused spontaneous combustion. 

"Argus, himself, with his hundred eyes, is no more alert 
than is a marine underwriter to the adoption of every ex- 
pedient which may result in saving of loss by avoidable perils, 
and thereby obtaining a profit on his transaction, and in the 
long run a reduction in the cost of insurance to the con- 
sumer." 

How Marine Insurance 
^Claims Are Collected 

The shipper usually collects all claims due on the marine 
insurance policy for the consignee although the matter of 
collection is up to the latter. The shipper does this merely 
out of courtesy. He assumes no responsibility in the matter ; 
he merely acts as agent for the consignee. 

When claims are made against marine insurance companies 
having agents in foreign countries the matter of collecting 
insurance money is charged with little difficulty. Shippers 
and consignees should always take pains that they cover them- 
selves with insurance policies of companies having agencies 
in the countries involved. Such connections make it easy to 
collect their just claims. 

In cases where the goods are damaged it is difficult to place 



MARINE INSURANCE 271 

the responsibility for such damage. Who must pay, the ship- 
owner or the marine insurance company? If the damage to 
merchandise is caused by the shifting of the cargo the ship- 
owner would be held responsible unless the captain of the 
vessel immediately upon arrival at port files a Protest in 
which he declares that the vessel experienced unusual rough 
weather during the voyage which might have caused the shift- 
ing of the cargo. This Protest is duly attested to before the 
consul of his country at the port of destination. When such 
Protest has been filed claim for damages is laid before the 
insurance people who are then held responsible. Payment is 
immediately made unless they dispute the captain's claim. 

The following steps are necessary in collecting insurance: 

Underwriters should be immediately informed of the ar- 
rival of the damaged goods so that they may appoint an expert 
to examine the goods. 

The expert will then make his recommendations which are 
usually that the goods be sold at auction. 

Evidence in the form of a bill of lading is required to show 
that the goods were actually shipped. 

Title to the insurance which is conveyed by the Certificate 
of Insurance must be produced. 

A formal sworn statement of the amount of damages sus- 
tained which may be had from the local authorized represent- 
ative of the underwriters' should be obtained. If it is impossible 
to obtain this statement the official statement of the custom 
house authorities certified by the consul of the country from 
which the goods were shipped is sufficient. 

A sworn statement indicating how the damage was caused 
is necessary. The sworn statement from the examiners is 
usually sufficient but where this will not be allowed it may 
be necessary to obtain a certified copy of the captain's sworn 
Protest which should give full particulars. Without these 
particulars it will be difficult to convince the insurance com- 
pany of the justice of the claim. 

A copy of the commercial invoice is necessary. 

The foregoing documents once in the hands of the con- 
signee should serve to make the collection on the insurance 
easy. 1 

The collection of claims from marine underwriters in which frequent delay is 
experienced, is in most instances due to the lack of necessary documents and 
other information. In such proceedings, the shipowner, the charterer, the exporter 
and the importer, each has a duty to perform, and unless that duty is properly 



272 EXPORTING TO THE WORLD 

discharged the marine underwriter is naturally delayed in arranging the payment 
of a claim. With a view to facilitating this work, the Frank B. Hall & Company 
have issued a small booklet which points out that before a claim can be collected 
from the insurance companies, or underwriters, it is necessary to show that a peril 
insured against has come to the "hurt, detriment or damage" of the ship or the 
interest insured, and that it amounts to the required percentags. This is usually 
done by documents known as the protest (generally an extended protest), the 
reports of survey and the receipted repair bills or vouchers. 

As soon as possible after the arrival of a vessel at a port of refuge or of 
destination (and within twenty-four hours after arrival) the captain (or master) 
of the vessel must note his protest before a notary public or consular officer briefly 
stating what has happened. If it then appears that the loss or damage is sufficient 
to warrant the making of a claim upon underwriters, the protest must be extended to 
include a narrative of the voyage, detailing the causes of the loss or damage. 
Whenever possible, the master should be sent to the office of the adjusters to 
have them extend the protest. The log books for the voyage during which the 
loss or damage has occurred should be delivered to the adjusters. The note of 
protest is not a sworn document and is signed by the master only. An extended 
protest is signed and sworn to by the master, one or more deck officers, one or 
more engineer officers and one or more members of the crew. 

Immediately upon arrival of a damaged vessel at a port of distress, or of 
destination, the master must notify his owners by cable and the owners in turn 
must immediately notify the adjusters, who will notify the various underwriters 
interested. The owners or their agents may appoint a surveyor to represent owners' 
interests, or their own superintendent, if they have one, may act. A survey will be 
arranged by the adjusters with the underwriters. If possible, all the surveyors 
should agree upon the causes and extent of the damage and should sign a joint 
survey report, /ny surveyor differing from the others should decline to sign the 
joint survey. 

After* the damage has been repaired, the surveyors should make further reports 
stating that repairs have been completed to their satisfaction and that the vessel 
is in a seaworthy condition and fit for the carriage of dry and perishable cargoes 
or of such cargoes as in their judgment she is fit to carry. If the vessel be tem- 
porarily repaired, the reports of surveyors must show this and their recommendations 
for final repairs. Confusion should not be made between the reports of classification 
surveys and damage surveys. If no marine surveyors are available, the master and 
engineers of other vessels in the port may be called upon, but masters must com- 
municate with their owners immediately in every case and bear in mind that they 
must not assume responsibility unless absolutely necessary or their owners instruct 
them to do so. Owners should always confer with and obtain the assistance of the 
adjusters. 

All repair and other bills relating in any way to the loss or damage, should 
be forwarded at once to the owners and by them to the adjusters. The adjusters 
will examine them and after consultation with owners, master, surveyors, etc., 
determine which may be for owner's account. 

Bills should be receipted or receipts attached before they are forwarded to the 
adjusters. Owners should furnish to the adjusters particulars of the credit, if any, 
to be allowed for old material and should also advise if any of the repair work was 
done on overtime. Where this latter is the case, underwriters may be charged with 
the overtime bonus only to the extent to which they have benefited thereby as by 
the saving of drydock dues. Where the repairs have involved the drydocking of the 
vessel owners should advise the adjusters when the vessel was last previously on 
drydock, and when she would have been due for docking in the ordinary course. 
Where the survey reports call for the painting of the vessel's bottom, the adjusters 
should be given the date when the vessel would next have been due for painting 
in the ordinary course. If the repairs made at a foreign port are partly temporary 
and partly permanent, or if they are partly for owner's account and partly for 
underwriters' account, or if they are partly on account of particular average damage, 
that is accidental damage, and partly on account of general average sacrifices, the 
surveyors at the time of their approving the repair bills should be requested to 
indicate on these bills how the various items should, in their opinion, be dealt with. 

Where a vessel having sustained loss or damage in the nature of general average 
arrives at a foreign port, the agent of the vessel or master must see that no cargo 
is delivered to the consignees until a general average bond or agreement has been 
signed and a guarantee given by acceptable underwriters or their agents, for the 
payment of all general average, salvage and (or) special charges, or until a deposit 
sufficient to cover what they will amount to has been collected from the consignees. 
The adjusters should always be consulted, and if possible attend to these matters 
themselves. 

Where the cargo is necessarily discharged in the general interest, care should 
be taken to note any damage which may be sustained in consequence of this forced 
discharge. While the cargo is out of the vessel it should be specially covered by 
insurance. General average disbursements incurred at a port of refuge should be 
covered by insurance from the port of refuge to the port of destination. 



MARINE INSURANCE 273 

Adjusters should be provided with a copy of the charter party, bill of lading, 
manifest, general average bonds and guarantees and all disbursement vouchers. 
Where the general average has consisted in putting into a port of refuge, the 
adjusters should be provided with a list of the master, officers and crew, together 
with the monthly wages paid to each. A detailed statement of the fuel and engine 
stores consumed in bearing away for and while at the port of refuge should also 
be provided. Where the vessel's engines have been worked in order to float her, 
particulars of the coal and engine stores consumed in working the engines should 
be provided. 

Where freight is insured against total loss only and under a P. P. I. policy 
claims are handled in the same way as claims on disbursements mentioned above. 
Where freight is insured with average conditions, it is necessary to support the 
claim with a copy of the charter party and, or, bill of lading, together with a 
statement showing the actual amount of freight collected and the amount which 
has been lost. The cause of the loss should be clearly brought out in the master's 
protest. 



CHAPTER XVIII 

HOW ORDERS ARE FINANCED 

American exporters have always enjoyed good banking 
facilities — Methods of financing shipments for export — 
Selling goods on open credit basis — How commercial credits 
are opened — Acceptance credits — Bill of exchange, or 
drafts. 

The matter of financing foreign trade is becoming less 
difficult. 

American banking institutions under pressure of the neces- 
sity of meeting the demands of American manufacturers and 
exporters are establishing branches in the principal trading 
centers of the world where they may be able to render service 
in the matter of financing the vast amount of business that is 
now done between buyer in a foreign country and seller in 
the United States. American exporters are fast learning how 
to use the machinery that will bring back to them the proceeds 
from the sale of merchandise to a customer whom they have 
never seen and who is doing business thousands of miles 
away from the source of supply. 

Perhaps one of the strongest barriers that prevents the 
average American business man from engaging in business 
with merchants in foreign countries is fear — fear that he may 
not be able to get his money for goods shipped. There is an 
uncertainty about it all, he reasons, and yet if he knew the 
familiar paths followed in this seemingly difficult function, 
and the ease with which he could transact business whether 
his customer happened to be in India or Australia or South 
America the barrier of fear and prejudice would soon dis- 
appear. 

American Exporters Have Always 
Enjoyed Banking Facilities 

The machinery of financing export trade is old. American 

274 



HOW ORDERS ARE FINANCED 275 

pioneer commission houses and other export firms have been 
familiar with the function of financing export shipments for 
many years. Although there were fewer branches of American 
banks existing in foreign countries in the early days, our pioneer 
export merchants never found it difficult to sell their goods and 
obtain their money in due time from their customers. If there 
were no American branches in certain foreign countries where 
American exporters did business surely there would be bank 
branches of British, German, French or Italian origin. Within 
recent years, however, American banking institutions recog- 
nizing the necessity and value of extending their activities to 
foreign fields in order to cooperate with the growing number 
of American merchants in the foreign markets of the world, 
have placed their branches in all the important trade centers 
of the world, and today there is not an important city in any 
section of the globe that does not boast of having a branch 
office of some powerful American banking house. There is no 
question that this branching and broadening out has served 
as a powerful stimulant in the development of commerce be- 
tween this country and other regions of the earth. 

Methods of Financing 
Shipments for Export 

"Well, we have got the machinery for handling our export 
trade," says a merchant. "We have got the ships to carry our 
merchandise; we have got our customers abroad to buy our 
goods; how, then, shall we go about it to obtain our money?" 

That is the first question that any manufacturer who is 
branching out for business in the Far East or in South Amer- 
ica will ask. "How can I get my money?" 

It is the purpose of this chapter to briefly describe these 
methods so that the details that are necessary to be learned 
may be clear to those who are ready to engage in export trade. 

The financing of exports may be divided into the following 
divisions : 

(a) Open credit. 

(b) Draft against importer. 

(c) Cash shipment. 



276 EXPORTING TO THE WORLD 

Selling Goods on 
Open Credit Basis 

Open credit means a book account. The merchant trusts and 
the customer is supposed to pay when bills are rendered in 
accordance with a previous agreement. In domestic trade 
open credit is common. Trading under this method is done 
to some extent in foreign trade. American exporters, how- 
ever, are reluctant to grant open credit which is in general 
demand the world over. Open credits make collections un- 
certain; risks are increased. Foreign customers in many in- 
stances do not show the inclination to meet their obligations 
at the stated time under the open credit basis. Distance lends 
them an air of indifference, and they are less susceptible to 
the demands of their creditors tHan they would be if within 
easy reach. The enforcement of prompt payment is not an 
easy task when the buyer and seller are separated by thou- 
sands of miles, and when cable tolls are high and the mails 
are very slow. 

Open credits may be successful, however, where the Ameri- 
can manufacturer or exporter has a branch establishment in 
the foreign country in which he is operating. It is less diffi- 
cult for the resident representative to keep in close touch 
with his customers, and to make his collections at stated in- 
tervals, and to enforce payments by lawful means when cus- 
tomers are rather slow in remitting. As a matter of fact, 
open credits are uniformly successful only under such con- 
ditions, or when there is a special agent of the seller on the 
ground to see that moneys due are paid within the prescribed 
period. 

Cash Terms in 
Export Trade 

The general rule followed when a new customer applies for 
merchandise and terms in the United States is cash in New 
York or at any other American port. There is nothing strange 
about this rule. It is even followed in the domestic business 
where it is quite difficult for a new customer to buy merchan- 
dise on credit from a firm unless he can produce a satisfactory 
commercial rating. There is no reason why this rule should 



HOW ORDERS ARE FINANCED 277 

be done away with in doing business with a customer in a 
foreign country. Contrary to opinion this rule is not pecu- 
liarly American. The British, Germans, French and other foreign 
trading nations demand cash in advance of shipment from cus- 
tomers with whom they have not done business before and those 
who are unable to produce adequate financial references. A 
manufacturer or exporter cannot extend credit to a person he 
does not know, and an importer should not ask for it until he 
has established himself in the confidence of those from whom 
he wishes to make his purchases. 

There are cases, however, where importers have very con- 
scientiously sent their cash in advance as payment for ship- 
ments they expected within a reasonable time. Unfortunately, 
they have been compelled to wait months and months for 
their merchandise, due to the negligence of some manufac- 
turer or exporter in this country. It is no wonder, therefore, 
that occasional criticisms are made against the practice of 
compelling cash in advance of shipment from importers. On 
other occasions it has been noted that goods have been re- 
ceived at destination in a damaged condition as the result of 
improper packing. In other instances, substitutions have been 
made, and the injury has been deep. The importer sends his 
money in advance, and he expects the things he has ordered. 
Cash in advance is demanded, however, only in cases where the 
foreign importer is practically unknown to the American ex- 
porter or where he fails to submit proper financial credentials. 
The bulk of our foreign trade is done on a credit basis, and the 
machinery for these credit operations is so simple that any one 
having the proper commercial rating and reputation may use 
it. 

A foreign importer who submits to the terms imposed upon 
him by an American exporter may be able to make his cash 
payment in the following manner: 

(a) He may send his remittance direct to the exporter. 

(b) He may send his remittance through the bank in the 
exporter's country, against the delivery of the necessary 
documents. 

(c) He may send his remittance through a local bank in 
his own territory, against the delivery of the necessary 
documents. 

The latter two methods of financing export shipments may 



278 EXPORTING TO THE WORLD 

be effected under a banker's credit of which there are many 
forms. Presently, we shall show how the latest of all meth- 
ods — the acceptance credit — may be used by importers in 
foreign countries for the purchase of their merchandise in the 
United States. In the meantime the opening of a commercial 
credit must have the reader's attention. 

How Commercial Credit 
May Be Opened by Importer 

A manufacturer upon receiving an order from a foreign 
customer with whom he has never done business before may 
suggest to him that his policy is to obtain cash for his goods 
before they leave the country, but that arrangements can 
easily be made for the mutual protection of both buyer and 
seller for the establishment of a commercial credit with a 
reliable American banking institution so that the payment of 
merchandise may be obtained upon the presentation of the 
proper papers by the shipper. This plan safeguards the im- 
porter who knows that his money is in good keeping, as well 
as the manufacturer who knows that he may obtain his cash 
the minute he presents his draft and necessary documents to 
complete the transaction. A commercial credit of this kind is 
advisable only when large sums of money are involved. 

The importer who desires to open a commercial credit in 
this country may go to his own local banker and make ar- 
rangement for the establishment of this credit with his cor- 
respondent in the United States. Commercial credits are 
either confirmed or unconfirmed. The local banker will in- 
struct its correspondent in the United States to pay certain 
moneys to certain persons in the United States under certain 
conditions. If the importer happens to be an old, reliable 
customer of the local banker he need not put up any money 
for this service immediately, but he may make payments only 
as the local banker requires. The local banker, of course, 
charges interest and a small commission for services rendered. 

If the local banker opens a confirmed credit for his client 
in the United States it means that it cannot be cancelled dur- 
ing its life unless with the consent of all the parties thereto ; 
the applicant for the credit, his banker, the issuing bank and 
the beneficiary. 



HOW ORDERS ARE FINANCED 279 

An unconfirmed credit is subject to revocation at any time 
by any of the interested parties, and on this account is not as 
acceptable to beneficiary as is the confirmed or irrevocable 
credit, particularly where merchandise is in process of manu- 
facture. The rate of commission charged by a bank on a con- 
firmed credit is slightly higher than that charged on an un- 
confirmed credit. 

A confirmed or irrevocable credit reads something like this : 
Guaranty Trust Company of New York. 

New York, October 15th, '9 . 

To The American Export Association, 
140 Broadway, New York City. 

Dear Sir: — 
In accordance with cable instructions received from Ban- 
co Mercantil Americano del Peru, Lima, Peru, we open an 
irrevocable credit in your favor for account of The South 
American Import Company, Lima, Peru. 

Amount $100,000 (One Hundred Thousand Dollars) 

covering shipment of General merchandise from New York 
to Callao, Peru. 

Drafts under this letter of credit are to be drawn at sight 
on us and are to be accompanied by a set of Shipping Docu- 
ments of a character which must meet with our approval, 
consisting of: 

Shipper's invoices 

Consular invoices if such documents are required in con- 
nection with this shipment. 

Marine and War Risk insurance policies. 

Full set of ocean steamer Bills of Lading made out to order 
and endorsed in blank, or to the order of the Banco Mercantil 
Americano del Peru.* 

This letter of credit is valid only upon there having been 
issued an appropriate Export License, covering the trans- 
action. 

It must be understood that payments under this Credit will 
only be made provided the goods are actually on board or 
loading on the Vessel named in the B. of L. 

If Government regulations restrict the issue of order Bills 
of Lading, please communicate with us and we will advise 
you in the premises. 

Marine insurance should cover from Warehouse to Ware- 



280 EXPORTING TO THE WORLD 

house, and not less than ten days after arrival, and also in- 
clude deviation clause, craft and lighter clause, negligence and 
or latent defect clause. Policies reading Free of Particular 
Average completely, must not be tendered without prior ar- 
rangement with us. 

This letter of Credit is issued subject to all regulations and 
enactments of the United States Government and its Allies 
and to any proclamations of the President governing export 
shipments. 

The document should be presented whenever possible in 
time to be forwarded on the steamer carrying the merchandise. 

This Letter of Credit expires June 30, 1920. 

If you are unable to comply with the terms as indicated 
above, please communicate with us promptly, and oblige, 

Yours respectfully, 
Guaranty Trust Company of New York. 

The confirmed credit differs from the unconfirmed or re- 
vocable export credit in that, as an irrevocable credit, it can- 
not be cancelled prior to the date specified in the credit with- 
out the consent of the four parties thereto. 

Commercial 
Letters of Credit 

When the shipper presents the necessary papers to the 
bank and complies with all the conditions under a commercial 
credit he receives his cash immediately. This kind of trans- 
action is generally called a cash credit and opposed to it is the 
time credit which is drawn for a longer period and is covered 
by a commercial letter of credit. The commercial letter of 
credit authorizes an exporter or manufacturer to draw a draft 
under certain conditions against an importer for merchandise 
he has sold. The letter may be addressed direct to the ship- 
pers or to the bank. When addressed to the shippers it reads 
something like this : 

"You are authorized to draw upon The International Bank 
in (name of city) under the following conditions." 

When the letter of credit is addressed to the bank it simply 
authorizes it in writing to accept the drafts of the shipper 
under certain conditions. If the letter of credit is confirmed 
to the shipper by the banker then the shipper has no further 



HOW ORDERS ARE FINANCED 281 

responsibility in the matter. No recourse can be had on him 
even if the importer fails. The banker alone is responsible 
now, and he is fully secured by the bill of lading and other 
papers made out to his order and which he sends to the foreign 
local bank with the draft for collection under terms that the 
local bank has arranged with the customer.. The customer 
pays the local bank which remits the money to the American 
institution in time to meet the draft at maturity. 

The agreement between the bank and the person for whom 
the letter of credit is drawn virtually provides that the latter's 
drafts will be duly honored upon presentation and under the 
conditions upon which the credit was given. There is a time 
limit to these letters, usually ; also provision is made that all 
drafts against the credit be accompanied by the customary 
documents such as the bill of lading, insurance certificates, 
invoices, etc. 

Bank Connections 
Determine Form of Credit 

The form of the credit is usually determined by the char- 
acter of the banking connections of the importer. The rates 
of exchange between one country and another may also de- 
termine its form. The importer need not always open up a 
credit through his local bank. He may open credit directly 
in the exporter's market if his financial standing is satisfactory, 
thereby dispensing with the local bank and the necessity of 
paying an extra commission. 

The operation of these commercial credits when made avail- 
able in this country is described in a "Handbook of Finance 
and Trade with South America" issued by the National City 
Bank of New York as follows : 

"Our branch or correspondent in foreign country through 
which credit is established, informs us of the opening of 
Credit, and we in turn inform the beneficiary that credit has 
been established by foreign firm in his favor, and also the 
amount and the conditions under which we will make pay- 
ments or accept drafts drawn thereunder. 

"Many large purchases are effected through this medium, 
through credits of this nature being arranged not only by 
South American firms in favor of firms in the United States, 



382 EXPORTING TO THE WORLD 

but also by American firms in favor of South American and 
European houses. 

"In cases where the foreign merchant does not open a com- 
mercial credit to cover his merchandise purchases in this 
country, payment is usually effected through the medium of 
draft which is forwarded for collection, either with or without 
shipping and other documents, to our foreign branches or cor- 
respondent banks." 

How Revolving Credit 
May Be Effected 

Reference to a Revolving Credit is also made in the hand- 
book. It says: 

"Where the operations between two parties in different 
countries are to be more or less continuous, a convenient and 
economical form of credit, known as a revolving credit, may 
be established. 

"Under this form of credit, once the conditions are agreed 
upon they may be made permanent for future credits by 
simply embodying the conditions under which the amounts 
may again become available. Through the medium of a credit 
of this nature, as the amounts drawn thereunder are liquidated 
they again become available under the conditions of the orig- 
inal credit without the necessity of further cabling or cor- 
respondence. 

"Revolving credits may be divided into three forms. To 
illustrate : 

"A in foreign country opens a credit in favor of B in this 
country up to say $20,000, the conditions of which permit B 
to draw, as shipments are made, upon bank through which 
credit is made available, the said bank honoring such drafts 
when accompanied by documents covering a specific ship- 
ment. Upon liquidation by A of the amount or amounts 
drawn by B, the amount or amounts so liquidated again be- 
come available to be drawn against by B under the original 
conditions. Should the total amount of the credit become 
exhausted, no further drawings thereunder may be made by 
B until liquidation by A of all or a portion of the drafts drawn 
by B. This explains the revolving feature of this credit, in- 
asmuch as the full credit, or such portions thereof as have 



HOW ORDERS ARE FINANCED 283 

been liquidated by A, again become automatically available 
to be drawn against by B. 

"The second class of credit under this revolving form per- 
mits B upon A's instructions to the bank, to draw a specified 
sum in one draft. Upon maturity and payment of this draft 
by A, the same amount again become available to be drawn 
against by B upon the same conditions which governed the 
original drawing. 

"Under the third class of revolving credit, A in a foreign 
country permits B in this country to draw in one draft for 
the full amount involved, whereupon the credit again becomes 
automatically available for a similar amount and so on in- 
definitely until the expiration of the time limit specified in 
the original instructions. 

"This last form of credit is limited as to time, but as to the 
amounts drawn thereunder it is only limited as the unit in 
which the drafts may be drawn, no limit being set as to the 
maximum amount which may be drawn thereunder. 

"It is also possible to limit drawings to a certain amount 
during specified period, to be drawn in one or in various 
drafts, the original amount again becoming available at the 
expiration of each of such periods. 

"The revolving credit is very elastic in its application and 
may be made to serve any reasonable requirements along the 
lines suggested in the illustrations. Furthermore, it should 
be noted that the commission charged by the bank is calcu- 
lated not upon the full amount for which the credit is original- 
ly opened, but upon the amount or amounts as availed of 
thereunder." 

Opening of Commercial 
Credit Illustrated 

The National City Bank's Handbook of Finance and Trade 
with South America, presents a very concise illustration of 
a complete transaction involved in the opening up of a com- 
mercial credit. The bank traces the transaction from the 
opening of the credit to the payment to be made under its 
terms. It is as follows : 

"A merchant in Argentina, we will say, has ordered a quan- 
tity of machinery from a Chicago house. As the Chicago house 



384 EXPORTING TO THE WORLD 

is not familiar with the credit standing of the Buenos Aires 
firm, let us suppose that the information in our credit files and 
available to our clients, is not, in this instance, of a nature to 
warrant the extension of time. The Chicago house thereupon 
cables the Argentine merchant that order will be entered if a 
confirmed commercial credit is opened in their favor through 
The National City Bank. 

"A confirmed credit is required in this instance, because 
the machinery may be of special manufacture, and the Chicago 
house, before commencing work upon it, wishes to be secured 
against a possible revocation of the order when perhaps the 
machinery is half completed. 

"The Buenos Aires merchant, acquiescing in the demand of 
the Chicago house, arranges with the Buenos Aires branch of 
the National City Bank of New York for the opening of, say, 
a $20,000 confirmed credit, to be availed of through the head 
office of the Bank in New York. 

"The Chicago house is made the beneficiary under this 
credit, which is practically an order on the New York office 
of the bank, either by cable or letter to pay to the Chicago 
house the amount stipulated, generally upon delivery to the 
bank of a full set of shipping documents covering the ship- 
ment. If the credit were an 'acceptance credit/ the New York 
office of the bank would 'accept' the draft of the Chicago house 
for, say thirty, sixty, or ninety days, as may have been agreed 
upon. Upon receipt at New York of either the cable or 
letter opening the credit, the Bank at New York immediately 
notifies the beneficiary (the Chicago house in this instance) 
that such credit has been opened and the conditions upon 
which payments thereunder will be made. It will be noted 
upon reference to the definition of a 'confirmed credit' that 
this kind of credit can be revoked only with the consent of 
the four parties concerned, viz., the Buenos Aires merchant, 
the Buenos Aires branch of the National City Bank of New 
York, the New York office of the National City Bank of New 
York, and the beneficiary at Chicago. 

Chicago House Prepares 
to Make Collection 

"The machinery having been completed, the Chicago house 



HOW ORDERS ARE FINANCED 285 

consigns it on a railroad bill of lading, to its New York agent, 
or, in the absence of a New York agent, then to some reput- 
able forwarding house at New York, the shipping port, with 
instructions to secure the ocean bills of lading, Consular In- 
voice, insurance certificates, and other necessary documents. 
These documents are thereupon presented to the bank, and if 
they are in order and meet the requirements of the credit, 
payment will be made by the bank, usually through the medi- 
um of a bank check to the order of the" beneficiary., If, how- 
ever, beneficiary is a depositor of the bank, it is probable that 
the amount will simply be credited to his account. 

"The bills of lading are generally made out 'to order* and 
are endorsed in blank by shipper, after which they are for- 
warded to our Buenos Aires branch. 'To order' bills of lading, 
however, are not permissible to Venezuela and Colombia, to 
which countries it is necessary to consign documents and 
merchandise direct to the consignee. More care is therefore 
necessary in looking into the credit standing of consignees in 
those countries. 

"It will be noted in the transaction we are following that as 
the bills of lading have been made out 'to order' and endorsed 
in blank, the bank, having possession of the documents, prac- 
tically controls the shipment, and the Buenos Aires branch 
will only surrender these evidences of title, which we will 
assume have gone along on the same steamer carrying the 
shipment, upon compliance by the purchaser in Argentina 
with whatever conditions were agreed upon in the undertaking 
creating the credit. These conditions may take various forms. 
If the credit standing of the Argentine merchant is beyond 
question, it is possible that he has established with our branch 
a line of credit to cover his commercial credit operations, in 
which event the documents may be surrendered to him with- 
out collateral security being placed with our branch bank. 

"Should security be deemed advisable, however, this may 
take various forms, such as, depositing with the branch ac- 
ceptable securities (bonds or stocks) until liquidation of the 
obligation, or perhaps, the depositing of a note bearing the 
endorsement of a responsible individual or firm. It may have 
been agreed that such surrender is to be made upon accept- 
ance by the Argentine merchant of a draft to be drawn upon 
him for an agreed tenor by our Buenos Aires branch. It may 



286 EXPORTING TO THE WORLD 

also take the form of a trust receipt to be delivered to the 
branch by the Argentine merchant, under which title to the 
merchandise remains in the name of the bank, the proceeds 
of partial sales to be turned over by merchant to the branch 
until complete liquidation of the transaction. There is usually 
more form than substance to a trust receipt, however, as once 
the merchandise has been placed in the warehouse of the 
purchaser it is not an easy matter, in fact it is practically im- 
possible in most instances, to have it so earmarked as to keep 
it safely guarded from other merchandise for identification in 
the event of default or other impediment arising. 

"It is possible that the conditions of the credit, owing to 
the financial and credit standing of the Argentine merchant, 
may be broad enough to permit of the documents being for- 
warded direct to the Argentine merchant by the shipper in the 
States, in which case such documents should be made out to 
his order direct. 

"In the case of an acceptance credit, the draft drawn upon 
the bank by the beneficiary (in this instance the merchant in 
Chicago), will be accepted by the head office of the bank in 
New York, under the Federal Reserve Act which grants to 
national banks the privilege of accepting bills of exchange 
growing out of transactions involving the importation and 
exportation of goods. This acceptance usually takes the form 
of a stamp across the face of the draft with the word "ac- 
cepted* and the date, with the signature of a duly authorized 
officer of the accepting bank, and will there upon be detached 
from the other documents for return to the Chicago firm, to 
be discounted by them immediately, if they prefer, or to be 
held by them until maturity date thereof. 

"In the case of the acceptance credit the conditions at 
Buenos Aires under which credit was originally opened quite 
likely specify that payment is to be made some days prior to 
the actual maturity date of acceptance at New York, through 
the medium of a draft to be drawn by our Buenos Aires 
branch upon the Argentine importer. This draft is given an 
earlier maturity date than the Chicago draft in order to en- 
able the Buenos Aires branch of the bank to cable funds to 
New York in time fqr the New York office to meet its ac- 
ceptance of the draft of the Chicago house. 



HOW ORDERS ARE FINANCED 287 

Difference Between Confirmed 
Documentary Credit and Acceptance Credit 

"One of the points of difference between the ordinary con- 
firmed documentary credit and the acceptance credit is that 
under the former it is not always necessary for the American 
shipper to draw drafts, the conditions of the credit usually 
instructing the bank to pay cash against receipt of documents, 
the*bank taking simply the receipt of the shipper for payments 
made thereunder. This receipt may consist of the simple en- 
dorsement of beneficiary on the bank's check for the amount 
involved. Under the acceptance credit, however, the instruc- 
tions from the bank through which the credit was originally 
opened to the bank through which it is to be made available, 
would be to accept the draft of the American shipper, under 
certain specified conditions, such acceptance by bank protect- 
ing the maker of draft in the event of the Argentine merchant 
becoming insolvent before maturity date, the recourse of the 
New York bank under such a contingency to be had to the 
foreign bank which originally opened the credit." 

Partial Payment in 
Advance Often Made 

The manufacturer or exporter should beware of partial pay- 
ments in advance. They may find themselves in considerable 
trouble in attempting to collect the balance. American mer- 
chants often find themselves in this predicament in dealing 
with foreign customers. Before permitting merchandise to 
leave the country on this basis the shipper should know some- 
thing about the responsibility of the importer. The fact that 
he has made a partial payment on the goods does not fully 
protect the manufacturer. There have been instances where 
partial payments have been made, the goods shipped, rejected 
at the other end, and finally sold at auction, the original buyer 
bidding in an extremely low price for the consignment. When 
ever a shipper is willing to permit his merchandise to leave 
the country on a partial payment basis he should protect him- 
self to the extent of demanding that the initial payment shall 
cover the entire costs of getting the goods back to the point 



288 EXPORTING TO THE WORLD 

of origin in case the customer refuses to accept them at the 
port of destination. 

The Acceptance Credit 
in Foreign Commerce 

The Federal Reserve Act authorizes member banks to ac- 
cept drafts drawn upon them arising out of commercial trans- 
actions involving the importation or exportation of goods 
having not more than six months to run. The establishment 
of an open discount market in this country in which bills 
of exchange may be bought and sold is the natural result of 
this authority under the Act. 

The acceptance system operates something like this: 

A foreign buyer wishing to purchase goods in the United 
States, and requested by the exporter to arrange a bank credit 
against which he may draw when the shipment is made, may 
arrange with his local bank for this credit. The local bank in 
turn gets in touch with its American correspondent and asks 
it to open a credit in favor of the American exporter and to 
foe drawn against under certain conditions. 

The American exporter ships the goods and then goes to 
the American bank with the bill of lading and other neces- 
sary documents with draft attached, and presents the latter 
to the bank for acceptance. The American bank stamps 
"accepted" on the face of the draft, returns it to the exporter, 
and forwards the shipping documents by first mail to its for- 
eign correspondent. The foreign bank may turn these docu- 
ments over to its client against such security as the bank may 
deem adequate. The foreign bank furnishes the funds to the 
American bank to meet the draft whenever it is due. 

The American shipper who now has in his possession a 
bank acceptance may do either of two things with this paper : 
He may discount it with his own bank, or he may go into the 
open discount market and obtain his money for it — which 
will be the ruling rate for member bank acceptances. 

The advantages of the acceptance credit are: 

The American exporter is able to extend his customer 
abroad "time" at the lowest cost possible. The exporter knows 
that he can sell the acceptance from an American bank at the 



HOW ORDERS ARE FINANCED 289 

lowest possible rate, and accordingly, adds a small percent- 
age to his selling price in order to cover himself for this 
nominal discount. 

Acceptance credits may be employed in anticipation of 
actual exports. A merchant having a large order from a 
foreign customer may, upon making arrangements with his 
bank, draw a long draft on the latter, and thereby use the 
funds thus created for the purchase or preparation of the 
shipment. Aiter the shipment has been made, the draft on the 
foreign purchaser or the foreign purchaser's bank, together 
with the shipping documents, are turned over to the bank, 
for discount or collection, the bank in turn using the pro- 
ceeds of this draft in liquidation of the original acceptance. 

The Draft, or Foreign 
Bill of Exchange 

The foreign bill of exchange or draft, as it is commonly 
called, is an instrument very well known in foreign trade. It 
is an unconditional order in writing addressed by one person 
to another, signed by the person giving it and requiring the 
person to whom it is addressed to pay on demand or at a fixed 
or determinable future time a sum in money to, or to the 
order of a specified person or bearer. 

The financing of shipments by draft is briefly explained by 
the National City Bank's Handbook as follows: 

"Now let us consider the shipment from Chicago as one for 
which a commercial credit had not been opened, the conditions 
of the order as placed stating that draft is to be drawn by 
shipper on the Argentine buyer either at sight, or say at 
sixty, or ninety days sight. 

"As in the case of the acceptance or confirmed credit, upon 
completion of the machinery and its shipment to New York, 
the forwarding agent in the latter city, acting under instruc- 
tions from the Chicago shipper, will have secured the neces- 
sary documents. Draft, made payable to the National City 
Bank of New York covering the invoice value of the shipment, 
plus charges to be included, having likewise been forwarded 
to the New York agent, will be presented by him with the 



290 EXPORTING TO THE WORLD 

complete set of documents to the New York office of the 
National City Bank. 

"It is possible that the Chicago merchant has had a line of 
credit established with this bank for the discount of his 
foreign drafts, in which event, if draft is discounted, the ac- 
count of the Chicago house with the bank will now be credited 
with the proceeds, or, if we are so instructed, with its full face 
value. This latter, however, is advisable only where an under- 
standing has previously been had between the shipper and 
foreign client whereby the latter understands that he is to 
pay the interest and charges involved in this procedure. 

Documents Must 
Accompany Draft 

"Whether draft is for collection or discount it will be for- 
warded with the complete set of documents to our Buenos 
Aires branch for collection. Upon arrival of the documents 
at Buenos Aires, our branch there will immediately advise the 
Buenos Aires merchant. The documents in this case, as in 
the case of the acceptance credit, are quite probably to 'order' 
and will be surrendered to foreign client only upon compliance 
by him with whatever instructions we have received in this 
respect from the Chicago shipper. If the draft be a sight 
draft, documents will be surrendered upon payment. If, how- 
ever, it be a time draft, the custom in South American coun- 
tries is to surrender documents upon acceptance of the draft 
by foreign client. In the case of a sight draft, drawn in 
dollars, the New York funds paid against the surrender of 
documents will be immediately forwarded to our New York 
office, where, if draft was not originally discounted for the 
Chicago firm, the proceeds will be placed to the credit of their 
account. If, however, draft is a time draft, the accepted 
draft will be held at our Argentine branch until maturity, at 
which time, upon payment being effected, remittance will be 
made to New York by the Buenos Aires branch as in the case 
of the sight draft." 



Drafts Clean or 

Documentary 



icumentary 

Drafts may be clean or they may be documentary. When 




HOW ORDERS ARE FINANCED 291 

documentary they are accompanied by bill of lading, insur- 
ance certificates or any other instruments necessary to estab- 
lish title to the merchandise. When clean they are unac- 
companied by any papers except duplicates of original docu- 
ments. These drafts are usually handled through third parties 
the bankers almost always being the third parties. 

Foreign drafts are always drawn in duplicate, known as 

J j.u„ <z~„^A r^f F.^rhan^e. When 



been preseiueu lu mv, vxx«.».^ — 

actual date when the bill is presented. The mere showing of 
the bill to the consignee is not enough, according to the law. 
The American manufacturer has two methods of collecting 
his money by draft. He may present it to the banker at home 
who in turn will send it together with the necessary docu- 
ments to his correspondents abroad with instructions as to 



Exchange for $500.00 New York. Jarmar ? ^ th > 1 * 19 * 

At sixty days sight nf this First of Exchan g e (Second Unpaid). 

pay to the order of IRVING NATIONAL BANK, NEW YORK 

Five hundred 00/100 - ...... L ............. — 

Value received, and charge the same to accohnt of ,-»-«, 

PAYABLE WITH EXCHANGE, COMMISSION, STAMPS AS WEli AS INTEREST 
ffr«r,o>, f^l^Al IWll On AT 6^1 PER ANNUM. FROM DATE HEREOF UNTIL ESTIMATED DATE OF 

Tn French Colonial Drill Co., ARR|V ^ RETURN REM1TTANCE IN new yobk. 



Saigon, 



Cochin-China 



New York Drill Co. 
by PRO FORMA 

ttp; 






290 



EXPORTING TO THE 



complete set of documents to the Ne^ 
National City Bank. 

"It is possible that the Chicago mere! 
credit established with this bank for 
foreign drafts, in which event, if draft 
count of the Chicago house with the ban 
with the proceeds, or, if we are so instru 
value. This latter, however, is advisable 




made to iNew YorK oy tne .Duenos /ur 
of the sight draft." 



Drafts Clean or 
Documentary 



Drafts may be clean or they may 



HOW ORDERS ARE FINANCED 291 

documentary they are accompanied by bill of lading, insur- 
ance certificates or any other instruments necessary to estab- 
lish title to the merchandise. When clean they are unac- 
companied by any papers except duplicates of original docu- 
ments. These drafts are usually handled through third parties 
the bankers almost always being the third parties. 

Foreign drafts are always drawn in duplicate, known as 
the First of Exchange and the Second of Exchange. When 
one is honored the other becomes void. Drafts are drawn 
in duplicate as a matter of safety in transmitting them 
through the mails to foreign countries. If one is lost there 
is a chance that the second one will reach its destination. 
It is customary for drafts to be drawn to "the order of our- 
selves" instead of to some specified payee. This plan per- 
mits greater freedom in the negotiability of these instru- 
ments. When drafts are sent by shippers to foreign banks 
for collection, however, they are either made payable to the 
bankers or endorsed to them. It must be remembered that, 
all drafts payable to the order of the drawer must be endorsed 
by him before they may be negotiated by anyone else. 

Drafts may be drawn at sight or they may be drawn at 
30, 60 or 90 days after sight. A sight draft is one payable 
on sight, or upon presentation to the drawee. This is the 
usual rule although in different countries varied regulations 
are encountered as to the proper time to present sight drafts. 
In some countries it is illegal to present sight drafts for col- 
lection until the bankers have in their possession duplicate 
sight drafts and a complete set of all documents. Some 
shippers having some consideration for their consignees 
usually draw sight drafts at from three to fifteen days at 
sight in order to give their customers ample time to pay 
them. 

Time drafts may be drawn anywhere from seven days to 
ninety days or more, after sight. Evidence that the bill has 
been presented to the drawee is obtained by notation of the 
actual date when the bill is presented. The mere showing of 
the bill to the consignee is not enough, according to the law. 

The American manufacturer has two methods of collecting 
his money by draft. He may present it to the banker at home 
who in turn will send it together with the necessary docu- 
ments to his correspondents abroad with instructions as to 



292 EXPORTING TO THE WORLD 

collection, or he may send the draft together with other 
documents to some reputable banker in the foreign country 
in which collection is to be made with instructions to the; 
foreign banker to collect. 

Drafts may be Sold 
Immediately to Bankers 

A shipper who may not wish to tie up his capital until the 
return of the money involved in a foreign sale may sell his 
draft directly to his local banker. This is often done in the 
case of small manufacturers and exporters who are unable 
to place their capital in such position. It is a common prac- 
tice, however, with large manufacturers and exporters who 
have sufficient funds to enable them to wait for several weeks 
or possibly months for remittances from abroad. 

The purchase and sale of foreign bills of exchange, or 
drafts, is a function assumed by what are known as interna- 
tional bankers, although the larger American banking insti- 
tutions at this date have regularly organized foreign depart- 
ments in which this sort of business is carried on in large 
volume. 

Foreign departments in American banks — particularly in 
national banks — are comparatively new things. They were 
practically unknown a few years ago when our foreign trade 
was not so interesting as it is at the present moment. It was 
difficult a few years ago to negotiate bills of exchange with 
banks that did not take this kind of business, and naturally 
many of these banks lost this kind of business to other institu- 
tions that were more thoroughly equipped to handle all kinds 
of foreign transactions in which the assistance of banks was 
absolutely necessary. The importance of this branch of bank- 
ing, however, was soon recognized and now we have all our 
great financial institutions engaged in foreign banking, and 
thoroughly competent to assist American manufacturers and 
exporters in the business of financing their shipments to every 
corner of the globe. 

How Foreign Exchange 
Banker Operates 

The foreign exchange banker thrives on the purchase and 



HOW ORDERS ARE FINANCED. 



293 



sale of drafts. If the customer's ratinp- is satisfartnrv tVipr^ 






u^' _ _ ~.~v» xv i.v mv invuac. x iic iuta.1 is men 

written into the draft. 
As has already been mentioned, when the draft is sold the 




A ninety-day draft. 



292 EXPORTING TO THE H 

collection, or he may send the draft 



The foreign exchange banker thrives 



HOW ORDERS ARE FINANCED. 293 

sale of drafts. If the customer's rating is satisfactory there 
will be no trouble in selling a draft even though he may be 
unknown to the banker. The latter must look into the cus- 
tomer's financial standing, of course, to protect himself 
in case the draft returns unhonored from a foreign country. 
Recourse, it must be remembered, is had on the maker of the 
draft. Not only must he refund the money obtained from 
the bank but he must also pay the costs which may have 
accrued in its attempted collection. 

Another factor that determines the banker's decision in 
the matter of buying a draft is the character of the merchan- 
dise shipped under the bill of lading. Articles for which there 
is a constant demand are safer from the standpoint of realizing 
on their value than novelties or specialities. Drafts drawn 
against grain, cotton or sugar are more acceptable to bankers 
than drafts drawn against automobiles, typewriters or certain 
kinds of machinery. Grain, cotton or sugar can be readily 
disposed of at a satisfactory price while there is always a risk 
in holding automobiles or machinery for sale. 

How Foreign Drafts 
Are Negotiated 

The mechanics of negotiating a draft are something like 
this : 

The shipper asks his foreign exchange bankers to quote on 
his drafts just before the shipment is ready to be sent, and 
when the value of the invoice is known. In asking for quota- 
tions on these drafts the shipper gives full particulars as to 
terms, the nature of the merchandise, the name of the con- 
signee, and other information that the banker may require 
If the draft is to be written in foreign money the shipper 
usually asks the banker for the rate of exchange before writ- 
ing out the instrument. He does this in order to write the 
equivalent amount of American dollars in the foreign cur- 
rency of the country to which he is sending the draft. If the 
draft is to be drawn in dollars the shipper may desire to know 
what the bank's charges as to commission, interest, etc., may 
be so that he can add it to the invoice. The total is then 
written into the draft. 

As has already been mentioned, when the draft is sold the 



294 EXPORTING TO THE WORLD 

understanding is that the responsibility for a refund in case 
the consignee refuses to honor it rests on the shoulders of 
the maker. Sometimes the bank requires that this under- 
standing be put down in writing but in recent years in view of 
the tremendous volume of business that is transacted daily 
by the banks it is a sort of unwritten law that the drawer 
shall be held responsible for the failure of the bank's cor- 
respondents in foreign countries to make their collections. 

Bank Must Have 
Title to Goods 

Not only does the bank require that the signature on the 
<draft be entirely satisfactory or that the character of the 
merchandise be acceptable but title to the goods must be prac- 
tically turned over to it before a draft may be bought. Title 
to merchandise is transferred by the delivering to the bank 
of the following documents: 

(a) Draft in duplicate to be drawn to "ourselves," endorsed 
in blank or with the banker in blank. 

(b)' A full set of all negotiable copies of the bill of lading 
signed by 1 the representative of the shipowner drawn to 
"order" and endorsed in blank. 

(c) At least two copies of the invoice and an itemized state- 
ment of charges which make up the total amount for which 
the draft is drawn. 

(d) Certificate of marine insurance in duplicate. 

(e) Consular invoices when countries require such docu- 
ments. 

(f) Certificate of Origin if shipment is to countries requir- 
ing such documents. 

Having all these documents in its possession, and feeling in 
every possible way that it is amply protected to advance the 
money to the shipper the bank now wants to know how the 
'draft is to be handled or taken care of at the other end. 

The following instructions or terms are usual: 

(a) Delivery of the bill of lading is to be made if a sight 
draft is immediately paid. This procedure is commonly 
known as "cash with documents." 

(b) If the draft is drawn for a certain period after sight 
or date the banker may be instructed to deliver the bill of 



HOW ORDERS ARE FINANCED 



295 



lading to the consignee either against payment immediately, 
or acceptance of draft. The latter procedure is commonly 
known as "documents against acceptance." 

In some parts of the world importers may be found who 
desire to take up their drafts before the date of maturity. In 
instances like this bankers may ask for instructions as to 



„r j: — 



„11 



-C -. ~ «.--4-/-v.*..^.^i4- + 1-..-.+- mm It rn-Ann/lmv 




v,uiuu uy vvni^ii uiciiLS axe to De paiQ. 



cie 1 ^. M ^^ 



Colonial clause known to all exporters doing business with 
South African and Australian importers is familiar to these 
merchants. It reads like this : "Payable with Exchange at the 
current rate in London for negotiating bills on the Colonies." 
This means that the draft must be paid at the ruling rate of 
exchange between New York and London and is passed by 
American bankers to London direct and not to Colonial banks. 



fsrbangfftfr 



UNITED STATES CURRENCY 



January 9th t 




Kinety day %y^ / sight 



Ourselves 



UNITED STATES CURRENCY 



drawn under authorization of^the Japanese Bank #100 

Payable with interest added at the rate of 6% per annum from date of 

jE/ Rei zo Matsuoka, draft until approximate arrival 

x of oover in New York, 



Kobe. 



F.C. Supply Co, , 



PRO FORMA 

Vice President. 



Draft Drawn under Banker's Authority to Negotiate. Should be endorsed by Drawer. 



294 EXPORTING TO TK 

understanding is that the responsibi 

the consignee refuses to honor it r 

the maker. Sometimes the bank r 

standing be put down in writing but 

the tremendous volume of business 

by the banks it is a sort of unwril 
-i — 11 u~ u~\a „~~~,-,:ui~ f~- ±u~ f 




LHKJll\^y L.KJ HIV, OlXljJJ^K^L mv uunu *... 

draft is to be handled or taken cat 
The following instructions or t< 

(a) Delivery of the bill of ladii 
draft is immediately paid. Th: 
known as "cash with documents. 

(b) If the draft is drawn for ; 
or date the banker may be insti 






HOW ORDERS ARE FINANCED 295 

lading to the consignee either against payment immediately, 
or acceptance of draft. The latter procedure is commonly 
known as "documents against acceptance." 

In some parts of the world importers may be found who 
desire to take up their drafts before the date of maturity. In 
instances like this bankers may ask for instructions as to 
rates of discount or allowance for interest that such procedure 
may justify. Shippers usually make certain discounts or al- 
lowances with importers in advance although in The Far 
East where this practice is common the local bankers publish 
regularly, "rates of rebate" for such transactions. 

IV hat Banks Charge 
for Collecting Draft 

The bank does not offer the service of making collections 
of drafts for American shippers for nothing. It must charge 
a small commission and include in the total bill such charges 
as postage and revenue stamps. The bank's commission 
ranges from one-eighth of 1 per cent to 2' per cent. Then 
there is the interest charge which runs from the time the 
draft is drawn to the time the proceeds are received by the 
bank in this country. For instance, if the bank buys a draft 
on Valparaiso, Chile, at 90 days sight, the interest will run 
for ninety days plus the time it will take the draft to reach 
Valparaiso and the time required for the remittance to reach 
this country. This interest charge, together with commission, 
and other minor charges, is included in the total of the draft. 

Peculiarities of Drafts 

in Certain Foreign Countries 

Custom or local conditions in foreign countries sometimes 
determine the method by which drafts are to be paid. The 
Colonial clause known to all exporters doing business with 
South African and Australian importers is familiar to these 
merchants. It reads like this : ''Payable with Exchange at the 
current rate in London for negotiating bills on the Colonies." 
This means that the draft must be paid at the ruling rate of 
exchange between New York and London and is passed by 
American bankers to London direct and not to Colonial banks. 



296 EXPORTING TO THE WORLD 

Drawees must pay interest, commission and other charges 
between London and Colonial banks. 

Drafts drawn on certain countries of South America are 
either drawn in dollars, U. S. currency, reading "payable in 
legal currency at the bank's drawing rate on day of payment 
for sight bills on New York," or drawn in pounds sterling 
reading, "Payable in legal currency at the bank's drawing 
rate on day of payment for ninety days sight bills on London." 

When drafts are drawn in dollars all charges such as in- 
terest, commissions, etc., should be included on the face value 
of the draft, although this should not be done until there is a 
complete understanding with the customer at the other end 
that this procedure will be followed. 

When drafts are drawn in pounds sterling all minor charges 
such as interest, commission, etc., are charged in on the rate 
of exchange that bankers in this country quote. Drawees ar- 
range to pay these bills on London through their local bankers. 

Sometimes, in drafts to the Far East or other places wher^ 
it is impossible to make exact calculations clauses like this are 
usually inserted: "Payable with interest at 6 per cent per 
annum from the date of draft to approximate date of receipt 
of proceeds in United States." This clause is not inserted 
however, unless there is some previous understanding with 
the customer who often complains against paying anything 
beyond what is itemized on the invoice. 

How Exports Are 
Financed to Paraguay 

An interesting report on the methods of financing ship- 
ments to Paraguay recently made by Consul Henry H. Balch, 
of Asuncion, Paraguay, reflects the varying methods that may 
be in force in various parts of the world in connection with 
financing exports. This report appeared in an issue of "Ex- 
port Trade" and part of it is as follows : 

"The usual fee charged by Asuncion banks for the collec- 
tion of amounts held by foreign banks on all classes of drafts, 
whether clean, documentary, or time, is one-fourth per cent 
with a minimum charge of 25 centavos, Argentine gold (about 
23 cents) for drafts of small amounts. 

"Each draft presented for collection must bear a Para- 
guayan stamp. The stamps required are as follows : For sight 



HOW ORDERS ARE FINANCED 297 

drafts or up to six days, 50 centavos ; for drafts of nine days 
up to six months, one peso per $1,000 or more; for drafts of 
more than six months, 2 pesos per $1,000 or more. Such ex- 
penses are usually charged against the drawer of the draft. 
Checks or drafts remitted by Paraguayan banks in settlement 
of collections for foreign banks do not require Paraguayan 
stamps. 

"The commercial code of Paraguay is the same as that of 
Argentina. Items must be presented before 11 o'clock a. m. 
on the day following due date. A notary draws up the act 
and notifies the drawee who states his reasons for not pay- 
ing. The note of protest is made by the notary on the back 
of the draft, a copy of which may be obtained when re- 
quired. 

> "The regular protest charge is 30 Paraguayan pesos for 
each signature to draft. If the draft is not in Spanish, an ad- 
ditional translation charge of 60 Paraguayan pesos for each 
page is made. These charges are made whether the bill is 
taken up or not. 

"Banks generally will accept goods on consignment for 
transfer to the drawee according to the terms specified in 
the bill, but only when the goods represent the value of 
the bills sent for collection. Banks do not accept goods for 
the sole purpose of selling or storing them. The only charges 
for such services are those specified above. 

"The usual banking phrase used in drafts drawn against 
Paraguayan consignee in dollars to enable the remittance 
of the face amount of such bills without deduction is : 'Pay- 
able with exchange, commission, stamps, and all costs for 

sight drafts in dollars on New York'." 

Banks accept the consignment of goods imported into Italy, charging as a 
rule 1-2 per mille if they sell the goods and 1-4 per mille if an agent sells them. 
Banks discourage the sending of parcels to them, preferring that they be sent 
to a forwarding agent for their account. The forwarder then collects from the 
signee, and to his charge the bank adds its fee for collecting and issuing a delivery 
order on the forwarder.. 

The charge for collecting clean items on Genoa is 0.50 lira per item, plus 1 
lira for each advice of item paid. To this is added any actual expenses incurred. 
The commission for collecting any documentary items is the same as for clean 
items, plus an additional 1-2 per mille, the minimum charge being 2 lire. The 
commission for obtaining acceptance is the same as for collecting. This tariff 
applies to the principal cities of Italy. 

Bill stamp charges in Italy are 1 per mille. _ If the bills are stamped in the 
country of origin, the charge is 1-2 per mille. It is customary to attempt to collect 
these charges from the drawee, who usually pays. Deductions for stamp charges 
are made from remittances in case the drawee does not pay. No charge is made 
for stamps on checks remitted in payment of collections. 

Protest on drafts with a fixed maturity must be made 48 hours after the day 
of presentation; i. e., the drawee has two days after the due date in which to pay 
Sight drafts can be protested at any time. Protest charges amount to about 15 
lire ; these charges are borne by the drawee if the item is paid after protest. 

In reference to collection and banking charges on bills there is no fixed custom 



298 EXPORTING TO THE WORLD 

as to who shall pay these charges, and there should always be an agreement between 
the buyer and seller or else a clause in the draft covering this point. At times 
drafts arrive on which the charges of the sending bank in America are added, and 
also interest to be collected from the date of the draft until the approximate date 
of arrival of funds in America. 

Local banks guarantee the payment of drafts accepted by approved firms and 
the charge for this is generally about one-fourth of 1 per cent. The phrases used 
in drafts to obtain reimbursement of special charges, such as collection, commission, 
interest, and bill-stamp charges, are the same as those used in the United States. 
When it is desired to have the full face of the draft remitted such phrases should 
always be inserted. Banks undertake to remit the proceeds of bills on the United 
States without loss of exchange provided the following clause is placed in the draft : 
"Payable at the remittance bank's selling rate for sight drafts on New York." 

There is no general custom regarding the bank from which the drawee pur- 
chases his draft. For large amounts he usually inquires of several banks to see 
where the most favorable rate may be obtained. When drafts are drawn in 
foreign currency it is the trade custom to accept the bank's selling rate for sight 
drafts. But, according to a war decree still in force, the drawer may pay at the 
official rate of exchange as fixed by the Bank of Italy, which rate is usually half- 
way between the buying and selling rate. This privilege, however, is rarely 
invoked. 

Italian law fixes the rate of interest allowed to accepters for retiring di-afts 
before maturity at 1 per cent. In practice, however, the rate is generally the 
same as the credit rate of interest on current accounts, which is at present from 
2 to 3 per cent. 

The only bank charges other than those already mentioned are for postage and 
bill stamps. It is preferred that these be paid in lire. If an account is carried 
with the Italian bank these charges are debited. If not, the dollar equivalent is 
paid to the bank's American correspondent. — Consul General Wilbur, in Com- 
merce Reports. 

The usual commission for collecting all items in Colombia, either with or 
without documents, is one-half of 1 per cent. It costs local banks from 1 to 1J 
per cent to collect items on interior points, and in such cases this charge is 
added to their commission. 

The stamp tax provided by law for drafts is 4 cents per $100 but this is 
generally disregarded. In the rare instances in which stamps are used the drawee 
is supposed to pay the tax, but when he objects — as he generally does — the bank 
has to pay it. It is probably for this reason that most paper bears no stamps. 

Protest charges are approximately $3 for each protest — a charge which the 
drawee has to assume if he later pays the draft. Protests are very seldom made, 
and local banks in taking items for acceptance and collection reserve the right to 
protest or not as they see fit, without responsibility on their part. Items may be 
protested either for failure to accept or to pay, and the protest must be made 
within 24 hours after the item is due and before 3 p. m. It may be made before 
maturity in case of failure or bankruptcy. All protests must be made before a 
notary public and two witnesses. The holder of a protested item is entitled to 
legal interest from date of protest until paid. (Colombia Commercial Code, arts. 
855-893.) 

Merchants most generally object to paying collection charges on items drawn 
on them, though they naturally pay interest on time drafts when so> specified. 
It is customary for the drawer to stand the expense of collection, and it is sug- 
gested that when it is desired that the importer pay these charges there be 
inserted on the face of the draft the phrase, "with all banking charges." 

Local banks do not guarantee the payment of drafts accepted by approved 
firms. 

If the shipping papers contain the drawee's name as consignee there is no 
advantage in drawing on a firm in Colombia with documents attached to be de- 
livered on acceptance. When merchandise arrives at the port it is delivered to the 
customhouse by the transportation company, and bills of lading are not required by 
the customs officials as a condition of delivery to consignee. The only document 
required to obtain the shipment is the Colombian consular invoice, and the con- 
signee need not obtain the original invoice attached to the draft held by the bank, 
but may demand a copy of the invoice received direct by the customhouse from 
the Colombian consul, which is issued to him on the payment of a small stamp fee 
and which he can use for making the regular customs entry. This procedure is not 
usual, but it has been resorted to, and unless a firm's credit is known to be good 
it is better to consign the merchandise to the bank with instructions to indorse 
the consular invoice to the purchaser upon his accepting the draft. — Consul C. E. 
Guyant, in Commerce Reports. 



CHAPTER XIX 

AMERICAN BANKS IN FOREIGN TRADE AND 
FOREIGN INVESTMENTS 

An exporting nation that aims to obtain a reasonable share 
of the world's commerce requires coordination on the part 
of those interests that may be directly or indirectly con- 
nected with foreign trade. Obviously, there must be a desire 
on the part of all concerned to work in harmony for the 
development of business abroad; there must be the fullest 
cooperation on all sides; there must be a natural willing- 
ness to shoulder a certain share of the common task. Work- 
ing hand in hand, the building of business overseas will be 
accomplished with facility; working at cross purposes, prog- 
ress will be retarded. 

It is needless to say that from the Government must come 
the cooperation, and the authority to do business abroad 
on a basis that will put us on an equality with our foreign 
competitors. We have already seen how American manu- 
facturers and exporters may combine for the purposes of 
engaging in foreign trade on a basis that will insure economy 
of operation as well as efficiency in merchandising. Before 
the enactment of the Webb-Pomerene Act there was no 
device available to American exporters that would enable 
them to successfully compete with gigantic combinations ex- 
isting in foreign countries. While we were enjoying a tre- 
mendous business abroad in spite of this disadvantage, never- 
theless, the addition of this device to our scheme of foreign 
merchandising has resulted in the most gratifying results 
within recent months. Our statistics of foreign trade show this 
to be true. 

A similar situation has been created in connection with 
our merchant marine. Whether an American merchant ma- 
rine must exist under direct Government ownership or under 
private ownership need not be argued here. What we 
are most vitally concerned in at the present moment is in 

299 



300 EXPORTING TO THE WORLD 

having a merchant marine which is capable of carrying our 
vast stores of supplies to foreign countries, and which is 
capable of bearing up under the most severe strain. Our 
merchants must have some form of assurance that they are to 
be extended all the necessary facilities to move their goods 
to foreign countries. Without cooperation in this respect it 
would be difficult to compete with foreign countries for the 
world's trade. 

And then the machinery of financing our shipments to cus- 
tomers abroad must be in smooth running order. Before the 
enactment of the Federal Reserve Act our national banks 
were denied the authority to establish branches in foreign 
countries. The business of these banks that found it necessary to 
do business abroad was transacted through affiliations in foreign 
fields. But as our business grew it became apparent that 
additional banking facilities would be necessary to take care 
of the increasing wants of our manufacturers and exporters 
whose business was growing tremendously in volume. The 
banks were needed to handle credit operations; to obtain 
credit information, and to transact all other business peculiar 
to banks engaged in foreign trade. 

The Federal Reserve Act came to the rescue. It empow- 
ered our national banks to discount acceptance paper repre- 
senting trade transactions, to hold stocks in national bank as- 
sociations organized for foreign trade under agreement with 
the Federal Reserve Board, and to establish branches in 
foreign countries. 

With the loosening of the legal strings, American banking 
corporations have been making remarkable progress in for- 
eign fields. The American exporter now has banking 
facilities equal to those of any other foreign country. Inter- 
national transactions are now handled by our banks with ease. 
It is just as easy to transact business through a bank with a 
merchant in Buenos Aires as it is with a merchant in North 
Dakota. These banks are also rendering remarkable service. 
They are gathering reliable credit data from all corners of the 
globe for the use of their clients. Information regarding com- 
mercial conditions is at the disposal of manufacturers and 
exporters. For instance, the National City Bank of New 
York, which has the largest number of branches in foreign 



AMERICAN BANKS IN FOREIGN TRADE 301 

countries of any American bank issues booklets on foreign 
trade that are invaluable to American merchants. 

Foreign trade experts connected with the bank from time 
to time prepare papers on various phases of foreign trade that 
should be in the hands of every exporter. 

Another national bank rendering admirable service in for- 
eign trade is the Irving National Bank of New York City. 
Although it has no branches in foreign countries it has affilia- 
tions in all principal centers. A feature of the bank's services 
to exporters is the information it gratuitously extends to ex- 
porters. It has published two books on foreign trade — one 
concerning Latin America and another the Far East that 
should be in the library of every exporter. 

The Guaranty Trust Company, of New York, a state insti- 
tution, is another bank that is rendering great service to ex- 
porters; The Guaranty Trust Company's publications in con- 
nection with foreign trade are noteworthy. Having its own 
branches, and correspondents in many parts of the world the 
Guaranty Trust Company is in a position to render efficient 
service to its clients. 

Foreign Branches 
of American Banks 

There is given below a list of foreign branches of national 
banks, and banks doing business under agreement with the 
Federal Reserve Board, which were open for business on 
November 10, 1919: 

National Banks. 

1. National City Bank of New York City. 

Buenos Aires, Argentina. Artemisa, Cuba. 

Once, Buenos, Aires, Bayamo, Cuba. 

Argentina. Caibarien, Cuba. 

Rosario, Argentina. Camaguey, Cuba. 

Bahia, Brazil. Cardenas, Cuba. 

Pernambuco, Brazil. Ciego de Avila, Cuba. 

Porto Alegre, Brazil. Cienfuegos, Cuba. 

Rio de Janeiro, Brazil. Colon, Cuba. 

Santos, Brazil. Cruces, Cuba. 

Sao Paulo, Brazil . Cuatro Caminos, Plabana, 
Santiago, Chile. Cuba. 



302 



EXPORTING TO THE WORLD 



2. 



Valparaiso, Chile. 
Guantanamo, Cuba. 
Habana, Cuba. 
Manzanillo, Cuba. 
Matanzas, Cuba. 
Pinar del Rio, Cuba. 
Placetas del Norte, Cuba 
Remedios, Cuba. 
Sagua la Grande, Cuba. 
Sancti Spiritus ,Cuba. 
Santa Clara, Cuba. 
Santiago, Cuba. 
Union de Reyes, Cuba. 
Yaguaijay, Cuba. 
Genoa, Italy. 

First National Bank of Boston, 
Buenos Aires, Argentina 



Galiano, Habana, Cuba. 

Barcelona, Spain. 

San Juan, Porto Rico. 

Vladivostok, Siberia. 

Port of Spain, Trinidad. 

Calle Rondeau, Monte- 
video, Uruguay. 

Montevideo, Uruguay. 

Caracas, Venezuela. 

Maracaibo, Venezuela. 

Medellin, Colombia. 

Temporarily closed — 
Moscow, Russia. 
Petrograd, Russia. 

Mass. : 



Banks Doing Business Under Agreement with the 
Federal Reserve Board. 

1. American Foreign Banking Corporation, New York City. 



Panama City, Republic 

of Panama. 
Port au Prince, Haiti. 
Rio de Janeiro, Brazil. 



Brussels, Belgium. 
Cali, Colombia. 
Cristobal, Canal Zone. 
Harbin, Manchuria. 
Habana, Cuba. 
Manila, Philippine 
Islands. 

2. Mercantile Bank of the Americas, New York City. 

Paris, France. 

Barcelona, Spain. 

Madrid, Spain. 

Affiliated Institutions — 

Banco Mercantil Americano de Colombia; Bogata, 
Barranquilla, Cartagena, Medellin, Cali, Girardot, Man 
izales, Honda, Armenia, Bucaramanga, Colombia. 

Banco Mercantil Americano del Peru : Lima, Arequipa, 
Chiclayo, Callao, Trujillo, Peru. 

Banco Mercantil Americano de Caracas : Caracas, La 
Guayra, Venezuela. 



AMERICAN BANKS IN FOREIGN TRADE 303 

American Mercantile Bank of Brazil : Para, Pernambuco, 

Brazil. 
National Bank of Nicaragua : Managua, Bluefields, Leon, 

Granada, Nicaragua. 
Banco Mercantil Americano de Cuba: Habana, Cuba. 
Banco Atlantida : La Ceiba, Tegucigalpa, San Pedro Sula, 

Puerto Cortez, Tela, Amapala, Honduras. 

(A branch office is also maintained by the Mercantile 
Bank of the Americas in New Orleans, La.) 

3. Asia Banking Corporation of New York City: 

Canton, China. Manila, P. I. 

Changsha, China. Peking, China. 

Hankow, China. Shanghai, China. 

Hongkong, China. Tientsin, China. 

4. International Banking Corporation of New York City: 

Bombay, India. 'Panama, Republic of Pan- 
Canton, China. ama. 
Calcutta, India. Rangoon, India. 
Batavia, Java. Shanghai, China. 
Cebu, P. I. Soerabaya, Java. 
Colon, Republic of Singapore, Straits Settle- 
Panama. ments - 

TT 1 rw Santo Domingo, Domini- 

Hankow, China. fe 

TT 1 . ~. . can Republic. 

Harbin, China. r . . 

__ . _, . Sanchez, Dominican Re- 
Hongkong, China. 

Kobe Ta an P 

' J P ' San Pedro de Macoric, 

London, England. Dominican Republic. 

Lyons, France. Santiago, Dominican Re- 
Manila, P. I. public. 

Peking, China. Tientsin, China. 

Puerto Plata, Dominican Tsingtao, China. 

Republic. Yokohama, Japan. 

(A branch office is also maintained by the International 
Banking Corporation in San Francisco, Calif.) 



304 EXPORTING TO THE WORLD 

5. Park Union Foreign Banking Corporation, New York City. 

Paris, France. Shanghai, China. 

Yokohama, Japan. 

(Branch offices are also maintained in San Francisco, 
Calif., and Seattle, Wash., by the Park Union Banking 
Corporation.) 

The First National Corporation, Boston, Mass., has opened 
no foreign branches. A branch office of the corporation is 
maintained at 14 Wall Street, New York City. 

The Shawmut Corporation of Boston, Mass., the French 
American Banking Corporation of New York City, and the 
Foreign Credit Corporation of New York City have opened 
no foreign branches. 

There Is Limit to 
Bank's Cooperation 

With these banking institutions ready to cooperate with 
American exporters in the development of foreign trade the 
opportunity is present for tremendous progress in foreign 
fields. The difficulties of financing foreign shipments — which 
have discouraged many an American exporter from engaging 
in foreign commerce — have been reduced to a minimum by 
the establishment of branches and other affiliations. The 
exporter must not, however, place his entire faith in the aid 
he is to receive from the banks. The banks can merely co- 
operate, but it is not their mission to "drum" up trade for 
their clients. The success of the exporter's venture depends 
upon himself and not upon the banker. The banker has 
difficulties of his own in maintaining a foreign organiza- 
tion. 

In speaking about the mission of American banks having 
branches abroad, John E. Gardine, Chairman of the Board of 
the International Banking Corporation, before the Sixth Na- 
tional Foreign Trade Convention in Chicago, in 1919 had this 
to say: 

"We cannot expect to sell goods without placing the pur- 
chaser in a position to buy them. Today the purchasers of 
Europe have no money. Consequently whatever we sell must 
be on a credit basis. South America, however, is in a better 



AMERICAN BANKS IN FOREIGN TRADE 305 

position to trade. In fact, we have been a debtor nation to 
that country, so we know how it feels to owe money, where 
the reverse should be the case. That, however, is the matter 
of yesterday. We are not here to criticise what has been done, 
nor to suggest what should be done tomorrow along political 
lines. My purpose is to demonstrate to you the usefulness 
of one branch of commercial life of this country, in doing 
pioneer work in foreign lands, and that is to show you to 
what extent the branch bank system, as authorized by the 
Federal Reserve law, can be utilized to its fullest extent and 
can lend its aid to the furtherance of the foreign business of 
the country, which will be so essential in the future. 

Federal Reserve Law 
Permits Foreign Branches 

"As you all know, this notable act of ours permits national 
banks with a capital in excess of one million dollars, to es- 
tablish branch banks in foreign countries, with the consent 
of the Federal Reserve Board. That consent has never been 
withheld, but the establishment of branch banks is not an 
easy matter. It is not a question of money. It is a question 
absolutely of personnel. 

"It may seem strange that in this country of 107,000,000 
inhabitants, one of the most difficult things to obtain is a 
staff of competent men to engage in one of the most respect- 
able, most lucrative businesses in foreign lands. But, sad to 
relate, it is so, and the result has been that the banks of this 
country are forced to establish their own educational insti- 
tutions, so that these men can have the proper training. 

"In the past we have been obliged to put our reliance upon 
foreign institutions, in doing our foreign business. That 
again, is a matter of yesterday. The foreign institutions that 
are abroad resent the entrance of American institutions 
into their field, and properly so. They, of course, are only 
there in the interest of their nations, and to such an extent 
do they carry out that policy that they do not hesitate to 
resort to the most unfair methods in meeting and combatting 
competition from other lands. It is no small wonder that the 
German trader was so successful in foreign lands. But when 
we now find out how that was done, we really shudder at the 



306 EXPORTING TO THE WORLD 

lowness of their attitude. Never an invoice nor bill of lading 
came into their hands but what it was copied and sent to their 
home office and there made use of to the fullest extent. Is 
it any wonder that their trade progressed so well? 

"Another advantage that the American merchant can find 
in the existence of branch banks is in the continuation of re- 
sponsibility. Many of you have noted, when you have handed 
your collections into the bank that you were told that the bank 
would assume no responsibility for any act of its agents, over 
whom it had no control. So that if a failure took place while 
an item was in process of collection, and it just happened to 
strike you and your check that was remitted was worthless, 
you were the sufferer. Your bank assumed no responsibility. 
Now that has been done away with. That is also a matter of 
yesterday. Today responsibility is continuous. It is an item 
that really is worth consideration when you take into account 
the unknown quantity that you formerly had to employ in 
foreign business. 

Credit Information 
Available to Client 

"A further and more important advantage is the compila- 
tion of credit information. Reports are on file in the office of 
the American banks that are absolutely complete, and could 
readily be compared with the files of any credit agency, and 
the contents of these files are not public property, but the 
property of the clients of the bank, and are absolutely con- 
fidential, and as confidential communications, contain matter 
that no credit agency was ever able to obtain. These files are 
at all times subject to the inspection of the bank's clients, and 
are always brought down to the latest date. 

"Furthermore, the advantage that the American shipper has 
in the protection of his property : You all know that the laws 
of some of the countries to the south of us are rather lax in 
the safeguarding of commercial interests, particularly bills 
of lading. The foreign merchant can oftimes obtain his goods 
by the mere statement at the custom house that they are his, 
although draft might be drawn with bill of lading attached, 
subject to payment. That means nothing, but here is where 
the branch bank steps in and knows just exactly how to pro- 



AMERICAN BANKS IN FOREIGN TRADE 307 

ceed in order to prevent any abuse of that practice. Since we 
have had branch banks in South America I cannot recall a 
single instance where merchants have lost anything through 
the delivery of goods without proper authority. 

"In the foreging remarks you will find the following ele- 
mentary service referred to along general lines, which we will 
summarize as follows : Continuity of responsibility, inviolabil- 
ity of trade secrets, the care of merchandise, reliable credit 
information. These are primary elements in the conduct of 
all banking business and we will now enter upon a closer in- 
vestigation of matters pertaining to individual clients ; par- 
ticularly in matters of public utilities or the laying of water 
pipes or other city or government undertakings, but in those 
cases, for instance thr laying of water pipes or mains in the 
city of Rio de Janiero : I know a great deal of care has to be 
exercised to see that the contractors are not imposed upon. 
The contractors, being Americans, the cases are generally re- 
versed. Instead of the contractor imposing upon the city, the 
authorities try to impose upon the contractor and he, not being 
familiar with conditions, not knowing how to turn or twist, 
appeals to the branch banks, but the men who are thoroughly 
conversant with that kind of business are in touch with good 
lawyers, and in that way a great service is being rendered. 

How Bank Advances 
Money Against {Shipments 

U A good deal of doubt has been brought forward as to 
whether American banks are in a position to advance money 
against shipments of merchandise, as is being done with cer- 
tain staples shipped, such as cotton, and on this subject the 
mind of the manufacturer can be set at rest. This line of 
business is carried on in different ways, either through a direct 
purchase of the draft or through an advance of a certain per- 
centage of the face value of the draft, or through direct loans 
with drafts hypothecated as collateral, or through direct loans 
regardless of any collateral value, and this latter line is em- 
ployed mainly where large contracts are in question and 
where it is not practicable or feasible to segregate any par- 
ticular transaction. These matters can be arranged under an 



308 EXPORTING TO THE WORLD 

understanding with the home bank, and in the past kave 
worked out very satisfactorily. 

"So far we have spoken of the manufacturer only as grant- 
ing credits, that is, he draws his draft and assumes the entire 
responsibility for the transaction until he receives his money 
in either one of the forms indicated above. This system may 
not suit the manufacturer, and he alone, is the arbiter in that 
respect. He might say, T haven't the capital to do business 
that way," or the goods being of such a character that they 
are valueless in the hands of any general purchaser, he might 
call for payments before the goods are shipped. Here again the 
branch bank steps in and is of the greatest assistance. Being 
acquainted with local conditions and with the merchants, the 
prospective buyer readily enters into an arrangement with 
the branch bank to make payments through the home office 
under certain conditions, either against the delivery of docu- 
ments or otherwise, so that the American manufacturer re- 
ceives his money sometimes even before the order is executed, 
where the problem is a risky one, but more often before the 
goods leave the factory. 

Bank Branch Does 
Tremendous Business 

"Business conducted along these lines in the past year 
or so, in the case of one particular bank I have in mind at 
the present time has run into the hundreds of millions of 
dollars, and the service rendered in this way extends all over 
the world, east, west, north and south — in fact, branches of 
that particular bank girdle the earth. The same service can 
be rendered the importer as well as the exporter. The de- 
velopment of the foreign business of the country is, generally 
speaking, of greater importance than is manifested by a casual 
consideration. Commercial instruments arising out of the 
import and export business of the country are the very es- 
sence of the security underlying the note issue of the Federal 
Reserve Banks, I refer to the bankers' acceptance. That, as 
a rule, results from foreign business. Internal trade brings 
with it trade acceptances which are just as important, but car- 
ries with it only the security of a commercial house ; whereas 
the banker's acceptance is recognized the world over and is 
eagerly sought for as an investment at the closest rates 
everywhere. 



AMERICAN BANKS IN FOREIGN TRADE 309 

"Now for the present the bankers of this country are per- 
fectly willing to render all assistance along these lines that it 
is possible to give, but it must be borne in mind that there are 
limitations in this respect. These limitations are provided for 
by law, beyond which a bank is not able to go. Thus you 
will see that the foreign business of the country would be 
severely circumscribed if confined merely to this extent* 
Therefore, the cooperation of manufacturers must be expected. 
The business of the country would then assume proportions 
commensurate with the resources, industrial and otherwise, 
of our people, but this all requires education, and I have en- 
deavored in my remarks to point out to what extent the 
banks and bankers of the country will be helpful to you in 
creating the necessary experience to successfully conquer the 
situation. 

The Foreign Trade 
Department of a Bank 

"In order to bring the buyer and seller together, a new de- 
partment has been organized by the banks of this country, 
and this is known as the Foreign Trade Department. This is 
an institution entirely distinct from the usual banking activi- 
ties and is manned in its personnel by men familiar with every 
line of business, whether commercial or industrial, and stands 
ready at all time, in every way, to lend a helping hand to the 
different manufacturers who first venture into the foreign 
field. Service is the watchword. As all these questions arise 
as to methods of manufacturing, marketing, financing and 
other kindred points that seem to the uninitiated difficult of 
solution or insurmountable, there is where the agencies of 
the foreign trade departments of the various banking in- 
stitutions throughout the country successfully contend with 
any difficulties of that character. It must be further borne 
in mind that the personal characteristics of the foreign na- 
tions are not those of our own and that methods that are 
necessary in approaching them or in dealing with them or in 
solving problems that arise out of continued intercourse, need 
the greatest finesse in order to avoid friction ; in fact, friction 
is the word that ought to be entirely abolished from any com- 
mercial code. The American youth sent out to man these 



310 EXPORTING TO THE WORLD 

branches are men of tried character throughout, conversant 
with business affairs in this country and very readily adapt 
themselves to foreign surroundings, and to the idiosyncrasies 
of the inhabitants of foreign countries, and through the exer- 
cise of a fine sense of discretion are able to smooth over rough 
spots that might otherwise cause a cessation of all inter- 
course." 

Other Services 
Rendered by Branches 

Service is the principal feature of the American bank branch 
in a foreign country. Without service the bank cannot expect 
to thrive. Without cooperating with American manufac- 
turers and exporters it cannot expect to grow. It must give 
service. Our larger banking institutions are so organized that 
they undertake through their foreign trade departments to 
keep their clients who are engaged in foreign commerce in 
close touch with conditions in foreign lands. Clients of such 
banks regularly receive trade reports from all sections of the 
globe. Credit reports on customers are at the disposal of 
clients. These credit reports are complete and represent one 
of the most important functions a bank engaged in foreign 
trade can perform for the American exporter who would be 
running around in circles unless he could obtain reliable 
credit information concerning a customer to whom he desires 
to ship thousands of dollars worth of merchandise. 

The traveler also receives the full benefit of this service 
in touring in foreign countries where American branch banks 
exist. The home office is always ready to give letters of in- 
troduction to clients who wish to visit abroad. These letters 
are presented to the manager of the foreign branch. The client 
is made to feel at home on arrival in a foreign port. If he is 
imacquainted with the methods of exchanging his American 
dollars for the currency of the country in which he happens 
to be the branch manager helps him. If he would like to 
obtain a list of reliable firms for the purpose of soliciting new 
business the branch manager sees that he is given a reliable 
list of names, and information regarding their credit standing. 
If he is unable to speak the language of the country the branch 
manager will place at his disposal a member of the staff to 




American banks are extending their activities to the world's markets 
where there may be opportunities for the sale of American goods. For- 
eign branches of American banks are needed in order to facilitate the 
financing of shipments. This photograph shows the London office of the 
Guarantee Trust Company of New York. 



AMERICAN BANKS IN FOREIGN TRADE 311 

act as interpreter and to introduce him to prospective cus- 
tomers. If he has trouble in getting his trunks out of the 
customs house or in planning his itinerary the branch manager 
sees that he is given assistance. 

Representative of 
American Business 

Above all, the service of the American bank in the foreign 
field that is most important is that of acting as the representa- 
tive of American business. In such capacity, it is needed. It 
cannot get the business for American business men — it is 
not supposed to assume that role, but it can help in develop- 
ing trade. It can place the foreign customer in touch with 
reliable American manufacturers or exporters. Once having 
accomplished this the consummation of the transaction rests 
with the American shipper. Hundreds of specific instances 
could be cited where our American banks established in 
foreign cities have directly fostered trade. The establish- 
ment of an American bank in a foreign country means that 
the United States is engaged in foreign business, and that it 
is in a position to extend every facility in its power to bring 
buyer and seller together. It acts as go-between. 

American business men do business differently than foreign 
competitors. The success of our foreign trade will rest large- 
ly not in the way we assimilate the ideals and customs of 
peoples across the seas but upon the way we extend the 
typical American commercial methods to their shores. We 
need not change our methods ; we need not lose our personal- 
ity. We must remain peculiarly American. Foreigners ex- 
pect this of us. It is a relief to know that American branches 
in foreign countries are American in every way. They rep- 
resent better than any foreign bank could possibly do it the 
American idea as it develops in foreign merchandising. Take 
the gathering of foreign credit information, for instance. 
When American foreign branches were first established 
in foreign countries it was said that importers could never 
be induced to give the specific information that American 
business men are accustomed to give in the United States. 
Now this is not difficult. The typical foreign credit report is 
a generalization of a business man's standing in the commun- 



812 EXPORTING TO THE WORLD 

ity. Sometimes, such reports are sufficient, but good business 
dictates that reports of this character be more specific now- 
adays. Some American banking institutions have over 50,000 
credit reports of foreign business men in their files. It is 
hardly likely that a manufacturer could go wrong in shipping 
merchandise to any importer named in this list which is pre- 
pared by experts, and is considered absolutely reliable. 

How Banks 
Extend Credit 

The ability of American banks to give adequate assistance 
to our manufacturers in foreign credit extensions is told by 
James H. Carter, vice president of the National City Bank 
of New York City as follows: 

"A few years ago it was true that American export trade 
was greatly handicapped by the lack of uniform banking 
service. It is not true now, and still manufacturers sometimes 
talk as if they thought the American banks would not do as 
much for them as European banks did for their exporters. 
The American banks that have built up international ma- 
chinery are themselves extending to American export trade a 
large volume of discount in the aggregate and it can be said 
no American manufacturer who has established his responsi- 
bility should lack credit in his foreign business. American 
manufacturers must do foreign business upon a credit basis, 
and the banks will surely meet them will a full share of co- 
operation. 

"Foreign credits seem to be frequently misunderstood by 
manufacturers. We often hear of the question of insuring 
foreign bills, or getting banks to buy foreign drafts without 
recourse to the exporter in case of dishonesty being brought 
up when groups of manufacturers talk together. I am sure 
that any intelligent manufacturer who goes into the subject 
of discount without recourse, or credit insurance exhaustively 
w r ill decide for himself that the principle upon which British 
and American bankers have agreed is correct: that both are 
unsound, or uneconomic in the long run. England is the 
home of the highest development of every kind of insurance 
in the world, but insurance of export drafts has never paid in 
England, because manufacturers after a trial of it have so in- 



AMERICAN BANKS IN FOREIGN TRADE 313 

variably come to the conclusion that they have to pay more 
for insurance than the service is worth that they do not sup- 
port any volume of insurance worth considering. The manu- 
facturer who desires to extend good lines of credit to foreign 
customers may go today to American banks and negotiate 
loans sufficient for safe business. The bank will advise him 
of the credit responsiblity of his foreign customer but it will 
not assume the risk of the credit. The bank takes into con- 
sideration the fact that it has in its possession the goods going 
forward; it takes into consideration also the responsibility of 
the foreign customers, and, on the average, it will allow the 
exporter usually a much larger line of discount than could 
be obtained were the business domestic; always, of course 
with recourse to the drawer in the event of dishonesty. Al- 
most invariably it has been the supposed limitation upon the 
foreign business done on credit that furnished the manufac- 
turer's motive in asking for insurance on discount without re- 
course. The larger volume of discount credit allowed by the 
bank goes in the direction of meeting this want. It is pos- 
sible that most manufacturers anticipate a larger opportunity 
for sales than actually materializes ; in other words, the manu- 
facturer actually finds that the British and American banks 
give him as large a volume of discount as he really needs and 
should consistently use in comparison to the capital he has 
in his business. And while a manufacturer often says that he 
would willingly pay a liberal commission or premium to be 
relieved of the contingent liability in foreign collections, it 
has worked out in British export experience, and will surely 
work out the same in our trade, that after trying insurance 
at the rates now obtaining, manufacturers conclude that they 
are paying more in premiums than the service of insurance 
is worth." 

Foreign Service That 
American Bankers Advertise 

Typical of the services that American banking institutions 
engaged in foreign trade render is this statement appearing 
in a pamphlet recently issued by a well known bank in New 
York City. It reads: 

"To manufacturers and merchants who are interested in 



314 EXPORTING TO THE WORLD 

modern methods of financing their import and export trade, 
we offer the advantage of our Foreign Department, and invite 
the opportunity of caring for their needs with an intelligent 
interest in the task. Supplementing our own facilities are 
those of correspondent banking institutions in all the leading 
trade centers, which provide direct and prompt service every- 
where. 

"Foreign Exchange — Foreign drafts, money orders, checks, 
and bills of exchange are bought and sold at current rates. We 
have remittances to all parts of the civilized world in dollars 
or foreign currencies. 

"Commercial credits — To finance imports and exports we 
open commercial credits and make payments in the United 
States and abroad. 

"Collections — We accept bills for collection on all countries 
and make advances while bills are in the process of collection. 

"Direct Connections — Our direct and intimate connections 
with many hundred correspondents in all parts of the civilized 
world enable us to perform special service, both for the in- 
dividual importer and exporter, and for corporations whose 
affairs extend over a wide territory. 

"Acceptances — Dollar Acceptances, and acceptances in 
other currencies are provided to finance the customers' con- 
signments and purchases. Domestic shipment of goods, as 
well as imports and exports, may be financed on liberal terms 
by this bank's acceptances. 

"Loans — Advances on security of warehouse receipts and 
bills of lading are made at convenience of clients. We dis- 
count approved bills of exchange. 

"Letters of Credit — Our letters of credit, issued on banking 
correspondents everywhere, are available throughout the 
world. 

"Travellers' Checks — Our Travellers' checks are readily 
convertible into all foreign currencies without inconvenience 
or delay, and form a safe method of carrying funds. 

"Money Orders — For remittances to places too small to be 
reached through banking channels we offer our money order 
system. By this system remittances are made without diffi- 
culty anywhere, money being delivered to recipients through 
their local post offices, without extra expense. 



AMERICAN BANKS IN FOREIGN TRADE 315 

"Cable transfers — We make able transfers to every 
country of the world with which America is in communication. 
''Facilities for Banks — Of special interest to banks and 
bankers in the United States is our system whereby arrange- 
ments are made to enable them to issue their own drafts and 
money orders, on forms printed in their own name. Such 
remittances are payable through the correspondents of this 
bank, etc. 

"Foreign Money — Various foreign currencies, whether gold, 
silver, or bank notes, are received for credit at current rates 
and are bought, sold or quoted. 

"Foreign Securities — We buy and sell treasury notes, bills, 
bonds and other foreign obligations. 

"Financial agent — We act as fiscal agent for foreign govern- 
ments, cities, banks, etc., and offer our services for collecting 
or disbursing purposes. 

"Credit information — The latest and most complete credit 
information respecting foreign firms and corporations is con- 
tained in our files. The service of these files has proved of 
immeasurable advantage to importers and exporters and is 
offered for the best accommodation of our customers. 

"Intelligent Service — Knowledge of foreign trade condi- 
tions, rates of exchange, etc., is of vital importance to the 
American business man. We cheerfully furnish this informa- 
tion which our experience and wide connections enables us to 
obtain." 

Another well known banking institution in New York City 
maintains a Foreign Trade Bureau. This bureau has a corps 
of investigators devoted to the study of foreign commercial 
conditions and export trade, and its services are at the dis- 
posal of those interested. 

The bureau will investigate any concern outside of the 
United States with regard to its credit standing and general 
commercial probity. The records of this bureau include over 
50,000 names of firms and corporations in foreign countries. 
It also collects information on international trade, conditions 
and opportunities making independent researches, using a 
number of sources and checking back and verifying the results 
of its labors. It strives to give its clients the latest and most 
complete available information. 

The Bureau keeps files of foreign and domestic busi- 



316 EXPORTING TO THE WORLD 

ness houses classifying them according to their interna- 
tional trade interests, and watches the course of commerce, 
with particular regard to the developing needs of other coun- 
tries, and opportunities for the promotion of new lines. 

An important feature of this bureau consists of the giving 
of information concerning the import tariffs of other countries, 
trade regulations and restrictions, both import and export as 
well as information regarding business procedure in other 
lands. 

The Edge Act to 
Extend Long Credits 

The latest form of banking legislation in the United States 
is the Edge Act, an amendment to the Federal Reserve Act, 
which represents another step forward in the development 
of international business relations and the restoration of 
foreign exchange to normal conditions. 

The principal purpose of the Edge Act is to permit other 
nations to purchase American goods on long-term credits. 
This may be done without tying up the capital of American 
manufacturers, exporters, or bankers beyond a reasonable 
time, yet it permits foreign buyers to postpone payment for 
goods until they are able to pay or until the foreign exchange 
situation is more satisfactory. 

To accomplish this end, the Edge Act permits the organi- 
zation of corporations which will be permitted to extend 
long-term credits on notes and securities offered by foreign 
buyers. 

This collateral will serve as a basis for the issuing of 
debentures by these corporations, for sale to the American 
investing public. 

As one writer puts it; "the Edge Act provides a species of 
reserve system for long credits, somewhat like the system 
provided by the Federal Reserve Act for short-term credits. 
The Federal Reserve bank buys, or discounts the notes that 
a member bank has received from merchants, giving currency 
to the member bank or a balance subject to its draft, thus 
unfreezing the funds which the member bank had put be- 
yond its own use by lending to the merchant. The corpora- 
tions created by the Edge Act will take the bonds or long- 



AMERICAN BANKS IN FOREIGN TRADE 317 

term notes which American exporters have received from 
foreign corporations and business men, and will give the 
exporter cash for them, unlocking frozen credits for him as 
the reserve banks do for their members. The reserve bank 
gets the cash for its purposes by the issue of circulating 
notes or the creation of balances subject to the member 
bank's draft. The Edge Act corporation will get its cash 
by reselling the foreign notes or bonds to American invest- 
ors or by selling the corporation's own debentures to the 
public, using the foreign notes and bonds as collateral to 
secure such debentures." 

Hozv Corporations May Be 
Formed Under Edge Act 

The following is a summary of the contents of the Edge 
Act showing how corporations may be organized under its 
provisions, and how they can conduct business : (the full 
text of the Edge Act is given elsewhere in this chapter) 

Corporations may be formed by five or more "natural 
persons." 

Articles of association must be filed with the Federal Re- 
serve Board. 

The principal powers of such a corporation are to deal in 
or discount notes, drafts, bills of exchange and acceptances, 
purchase or sell securities with or without its endorsement 
or guarantee, accept bills or drafts drawn upon it under limi- 
tations and restrictions imposed by the Reserve Board, issue 
letters of credit, borrow and lend money and issue debentures, 
bonds, and promissory notes under limitations prescribed by 
the Reserve Board, but in no event having liabilities out- 
standing at any one time exceeding ten times its capital and 
surplus. 

While it may receive deposit outside the United States 
it may only receive such deposits within the United States 
as may be incidental to or for the purpose of carrying on 
transactions outside of the country. 

It may establish agencies in the United States or branches 
abroad. 

It is forbidden to engage in any other business except such 
as is incidental to international or foreign operations. 



318 EXPORTING TO THE WORLD 

It cannot engage in commerce or in trade in commodities 
except as especially provided in the Act, nor shall it control 
or fix prices of any such commodities under pain of forfeiting 
its charter. 

The corporation must have at least $2,000,000 capital, one 
quarter of which must be paid in before beginning business. 
National banking associations may invest in the stock of one 
or more corporations organized under the Edge Act, but only 
up to 10 per cent of their capital and surplus. 

A majority of the shares of the capital stock must be held 
and owned by citizens of the United States, or by corpora- 
tions or firms chartered under the laws of the United States 
or of a State in the Union, the controlling interests in which 
are owned by citizens. 

Banks or banking institutions now incorporated under 
state laws may, by vote of shareholders, and with the ap- 
proval of the Reserve Board, be converted into a Federal 
corporation of the kind authorized by the Edge Act. 

The success of the Edge Act will depend largely upon 
the extent the corporations organized under the act are able 
to convince the American investing public as to the desira- 
bility of the debentures offered for sale. A campaign of 
education, it seems, will be required to bring about the de- 
sired results. It does not take much effort to induce an 
American investor to place his money on a domestic security, 
for besides its attractiveness, he feels a sense of security be- 
cause it is purely an American enterprise. But when he is 
asked to invest in a security he knows very little about, there 
will likely be trouble unless a campaign of education aimed to 
explain the desirability of these investments, is inaugurated. 

There should be no question as to the desirability of these 
investments if the corporations offering them, extend to the 
public the opportunity to carefully examine the collateral 
behind them. 

Herewith is the complete text of the Edge Act: 

An act to amend the act approved December 23, 1913, 
known as the Federal Reserve Act. 

Be it enacted by the Senate and House of Representatives 
of United States of America in Congress assembled, That 
the Act approved December 23, 1913, known as the Federal 



AMERICAN BANKS IN FOREIGN TRADE 319 

Reserve Act, as amended, be further amended by adding a 
new section as follows: 

"Banking corporations to do foreign banking business. 

"Sec. 25 (a) Corporations to be organized for the purpose 
of engaging in international or foreign banking or other inter- 
national or foreign financial operations, or in banking or other 
financial operations in a dependency or insular possession of 
the United States, either directly or through the agency, own- 
ership, or control of local institutions in foreign countries, or 
in such dependencies or insular possessions as provided by 
this section, and to act when required by the Secretary of the 
Treasury as fiscal agents of the United States, may be formed 
by any number of natural persons, not less in any case than 
five. 

"Such persons shall enter into articles of association which 
shall specify in general terms the objects for which the asso- 
ciation is formed, and may contain any other provisions not 
inconsistent with law which the association may see fit to 
adopt for the regulation of its business and the conduct of its 
affairs. 

"Such articles of association shall be signed by all of the 
persons intending to participate in the organization of the cor- 
poration and, thereafter, shall be forwarded to the Federal 
Reserve Board, and shall be filed and preserved in its office. 
The person signing the said articles of association shall, under 
their hands, make an organization certificate which shall spe- 
cifically state: 

"First. The name assumed by such corporation, which shall 
be subject to the approval of the Federal Reserve Board. 

"Second. The place or places where its operations are to 
be carried on. 

"Third. The place in the United States where its home 
office is to be located. 

"Fourth. The amount of its capital stock and the number 
of shares into which the same shall be divided. 

"Fifth. The names and places of business or residence of 
the persons executing the certificate and the number of shares 
to which each has subscribed. 

"Sixth. The fact that the certificate is made to enable the 
persons subscribing the same and all other persons, firms, 
companies, and corporations, who or which may thereafter 
subscribe to or purchase shares of the capital stock of such 



320 EXPORTING TO THE WORLD 

corporation, to avail themselves of the advantages of this 
section. 

"The person signing the organization certificate shall duly ac- 
knowledge the execution thereof before a judge of some court 
of record or notary public, who shall certify thereto under the 
seal of such court or notary, and thereafter the certificate shall 
be forwarded to the Federal Reserve Board to be filed and 
preserved in this office. Upon duly making and filing articles 
of association and an organization certificate, and after the 
Federal Reserve Board has approved the same and issued a 
permit to begin business the association shall become and be 
a body corporate, and as such and by the name designated 
therein shall have power to adopt and use a corporate seal, 
which may be changed at the pleasure of its board of directors ; 
to have succession for a period of 20 years unless sooner dis- 
solved by the act of the shareholders owning two-thirds of 
the stock or by an Act of Congress or unless its franchises 
become forfeited by some violation of the law; to make con- 
tracts ; to sue and be sued, complain, and defend in any court 
of law or equity; to elect or appoint directors, all of whom 
shall be citizens of the United States ; and, by its board of direc- 
tors, to appoint such officers and employes as may be deemed 
proper, define their authority and duties, require bonds of 
them and fix the penalty thereof; dismiss such officers or em- 
ployes or any thereof at pleasure, and appoint others to fill 
their places ; to prescribe, by its board of directors, by-laws not 
inconsistent with law, or with the regulations of the Federal 
Reserve Board regulating the manner in which its stock shall 
be transferred, its directors elected or appointed, its officers 
and employees appointed, its property transferred, and the 
privileges granted to it by law exercised and enjoyed. 

"Each corporation so organized shall have power, under 
such rules and regulations as the Federal Reserve Board may 
prescribe : 

"(a) To purchase, sell, discount, and negotiate, with or 
without its endorsement or guarantee, notes, drafts, checks, 
bills of exchange, acceptances, including bankers' acceptances, 
cable transfers and other evidences of indebtedness; to pur- 
chase and sellwith or without its endorsement or guarantee, 
securities, including the obligations of the United States or 
of any state thereof but not including shares of stock in any 
corporation except as herein provided ; to accept bills or drafts 



AMERICAN BANKS IN FOREIGN TRADE 321 

drawn upon it subject to such limitations and restrictions as 
the Federal Reserve Board may impose ; to issue letters of 
credit; to purchase and sell coin, bullion, and exchange; to 
borrow and to lend money; to issue debentures, bonds, and 
promissory notes under such general conditions as to security 
and such limitations as the Federal Reserve Board may pre- 
scribe, but in no event having liabilities outstanding thereon 
at any one time exceeding ten times its capital stock and sur- 
plus ; to receive deposits outside of the United States and to 
receive only such deposits within the United States as may 
be incidental to or for the purpose of carrying out transactions 
in foreign countries or dependencies or insular possessions of 
the United States ; and generally to exercise such powers as 
are incidental to the powers conferred by this act or as may 
be usual, in the determination of the Federal Reserve Board, 
in connection with the transaction of the business of banking 
or other financial operations in the countries, colonies, de- 
pendencies, or possessions in which it shall transact business 
and not inconsistent with the powers specifically granted 
herein. Nothing contained in this section shall be construed 
to prohibit the Federal Reserve Board, under its power to 
prescribe rules and regulations, from limiting the aggregate 
amount of liabilities of any or all classes incurred by the cor- 
poration and outstanding at any one time. Whenever a cor- 
poration organized under this section receives deposits in the 
United States authorized by this section it shall carry reserves 
in such amounts as the Federal Reserve Board may prescribe 
but in no event less than ten per centum of its deposits. 

"(b) To establish and maintain for the transaction of its 
business and branches or agencies in foreign countries, their 
dependencies or colonies, and in the dependencies or insular 
possessions of the United States, at such places as may be 
approved by the Federal Reserve Board and under such rules 
and regulations as it may prescribe, including countries or 
dependencies not specified in the original organization cer- 
tificate. 

"(c) With the consent of the Federal Reserve Board to 
purchase and hold stock or other certificates of ownership in 
any other corporation organized under the provisions of this 
section, or under the laws of any foreign country, or a colony 
or dependency thereof, or under the laws of any state, de- 
pendency or insular possession of the United States, but not 



322 EXPORTING IO THE WORLD 

engaged in the general business of buying or selling goods, 
wares, merchandise or commodities in the United States, and 
not transacting business in the United States, except such as in 
the judgment of the Federal Reserve Board may be incidental 
to its international or foreign business : Provided, however, 
that, except with the approval of the Federal Reserve Board, 
no corporation organized hereunder shall invest in any one 
corporation an amount in excess of 10 per centum of its own 
capital and surplus, except in a corporation engaged in the 
business of banking, when 15 per centum of its capital and 
surplus may be so invested : Provided, further, that no corpo- 
ration organized hereunder shall purchase, own, or hold stock 
or certificates of ownership in any other corporation organized 
hereunder or under the laws of any state which is in substan- 
tial competition therewith, or which holds stock or certificates 
of ownership in corporations which are in substantial com- 
petition with the purchasing corporation. 

"Nothing contained herein shall prevent corporations or- 
ganized hereunder from purchasing and holding stock in any 
corporation where such purchase shall be necessary to prevent 
a loss upon a debt previously contracted in good faith; and 
stock so purchased or acquired in corporations organized under 
this section shall within six months from such purchase be sold 
or disposed of at public or private sale unless the time to so 
dispose of same is extended by the Federal Reserve Board. 

"No corporation organized under this section shall carry on 
any part of its business in the United States except such as, 
in the judgment of the Federal Reserve Board, shall be inci- 
dental to its international or foreign business. And, provided 
further, that except such as is incidental and preliminary to 
its organization no such corporation shall exercise any other 
powers conferred by this section until it has been duly author- 
ized by the Federal Reserve Board to commence business as 
a corporation organized under the provisions of this section. 

"No corporation organized under this section shall engage 
in commerce or trade in commodities except as specifically 
provided in this section, nor shall it either directly or indi- 
rectly control or fix or attempt to control or fix the price of 
any such commodities. The charter of any corporation vio- 
lating this provision shall be subject to forfeiture in a manner 
hereinafter provided in this section. It shall be unlawful for 
any director, officer, agent, or employe of any such corpora- 



AMERICAN BANKS IN FOREIGN TRADE 323 

tion to use or to conspire to use the credit, the funds, or the 
power of the corporation to fix or control the price of any 
such commodities, and any such person violating this pro- 
vision shall be liable to a fine of not less than $1,000 and not 
exceeding $5,000 or imprisonment not less than one year and 
not exceeding five years or both, in the discretion of the court. 

"No corporation shall be organized under the provisions of 
this section with a capital stock of less than $2,000,000, one 
quarter of which must be paid in before the corporation may 
be authorized to begin business, and the remainder of the 
capital stock of such corporation shall be paid in installments 
of at least ten percentum on the whole amount to which the 
corporation shall be limited as frequently as one installment 
at the end of each succeeding two months from the time of 
the commencement of its business operations, until the whole 
of the capital stock shall be paid in. The capital stock of 
any such corporation may be increased at any time, with the 
approval of the Federal Reserve Board, by a vote of two- 
thirds of its share holders or by unanimous consent in writing 
of the share holders without a meeting and without a formal 
vote, but any such increase of capital shall be fully paid in 
within ninety days after such approval ; and may be reduced 
in like manner, provided that in no event shall it be less than 
two million dollars. No corporation, except as herein pro- 
vided, shall during the time it shall continue its operations, 
withdraw or permit to be withdrawn, either in the form of 
dividends or otherwise, any portion of its capital. Any na- 
tional banking association may invest in the stock of any 
corporation organized under the provisions of this section, 
but the aggregate amount of stock held in all corporations 
engaged in business of the kind described in this section and 
in Section 25 of the Federal Reserve Act as amended shall 
not exceed ten per centum of the subscribing bank's capital 
and surplus. 

"A majority of the shares of the capital stock of any such 
corporation shall at all times be held and owned by citizens 
of the United States, by corporations the controlling interest 
in which is owned by citizens of the United States, chartered 
under the laws of the United States or of a state of the United 
States, or by firms or companies, the controlling interest in 
which is owned by citizens of the United States. The pro- 
visions of Section 8. of the Act approved October 15, 1914, 



324 EXPORTING TO THE WORLD 

entitled "An Act to Supplement existing laws against unlaw- 
ful restraints and monopolies and for other purposes," as 
amended by the Acts of May 15, 1916, and September 7, 1916, 
shall be construed to apply to the directors, other officers, 
agents, or employes of corporations organized under the pro- 
visions of this section : Provided, however, that nothing herein 
contained shall (1) prohibit any director or other officer, 
agent or employe of any member bank, who has procured the 
approval of the Federal Reserve Board from serving at the 
same time as a director or other officer, agent, or employe 
of any corporation organized under the provisions of this 
section in whose capital stock such member banks shall have 
invested; or (2) prohibit any director or other officer, agent, 
or employe of any corporation organized under the provisions 
of this section, who has procured the approval of the Federal 
Reserve Board, from serving at the same time as a director 
or other officer, agent or employe of any other corporation in 
whose capital stock such first mentioned corporation shall 
have invested under the provisions of this act. 

"No member of the Federal Reserve Board shall be an 
officer or director of any corporation organized under the 
provisions of this section, or of any corporation engaged in 
similar business organized under the laws of any state, nor 
hold stock in any such corporation, and before entering upon 
his duties as a member of the Federal Reserve Board he shall 
certify under oath to the Secretary of the Treasury that he 
has complied with this requirement. 

"Shareholders in any corporation organized under the pro- 
visions of this section shall be liable for the amount of their 
unpaid stock subscriptions. No such corporation shall be- 
come a member of any Federal Reserve Bank. 

"Should any corporation organized hereunder violate or 
fail to comply with any of the provisions of this section, all 
of its rights, privileges, and franchises derived herefrom, may 
thereby be forfeited. Before any such corporation shall 
be declared dissolved, or its rights, privileges, and franchises 
forfeited, any noncompliance with, or violation of such laws, 
shall, however, be determined and adjudged, by a court of the 
United States of competent jurisdiction in a suit brought 
for that purpose in the district or territory in which 
the home office of such corporation is located, which suit shall 
be brought by the United States at the instance of the Fed- 



AMERICAN BANKS IN FOREIGN TRADE 325 

cral Reserve Board or the Attorney General. Upon adjudica- 
tion of such noncompliance or violation, each director and 
officer who participated in, or assented to, the illegal act or 
acts, shall be liable in his personal or individual capacity for 
all damages which the said corporation shall have sustained 
in consequence thereof. No dissolution shall take away or 
impair any remedy against the corporation, its stockholders, 
or officers for any liability or penalty previously incurred. 

"Any such corporation may go into voluntary liquidation 
and be closed by a vote of its shareholders owning two-thirds 
of its stock. 

"Whenever the Federal Reserve Board shall become satis- 
fied of the insolvency of any such corporation, it may appoint 
a receiver who shall take possession of all of the property and 
assets of the corporation and exercise the same rights, privi-" 
leges, powers, and authority with respect thereto as are now 
exercised by receivers of national banks appointed by the 
Comptroller of the Currency of the United States. Provided, 
however, that the assets of the corporation subject to the laws 
of other countries or jurisdictions shall be dealt with in ac- 
cordance with the terms of such laws. 

"Every corporation organized under the provisions of this 
section shall hold a meeting of its stockholders annually upon 
a date fixed in its bylaws, such meeting to be held at its home 
office in the United States. Every such corporation shall keep 
at its home office books containing the names of all stock- 
holders thereof, and the names and addresses of all members 
of its board of directors, together with copies of all reports 
made by it to the Federal Reserve Board . Every such corpo- 
ration shall make reports to the Federal Reserve Board at such 
times and in such form as it may require ; and shall be subject 
to examination once a year and at such other times as may be 
deemed necessary by the Federal Reserve Board by examiners 
appointed by the Federal Reserve Board, the cost of such 
examinations, including the compensation of the examiners 
to be fixed by the Federal Reserve Board and to be paid by 
the corporation examined. 

"The directors of any corporation organized under the pro- 
visions of this section may, semiannually, declare a dividend 
of so much of the net profits of the corporation as they shall 
judge expedient; but each corporation shall, before the dec- 
laration of a dividend carry one-tenth of its net profits of the 



326 EXPORTING TO THE WORLD 

preceding half year to its surplus fund until the same shall 
amount to 20 per centum of its capital stock. 

"Any corporation organized under the provisions of this 
section shall be subject to tax by the State within which its 
home office is located in the same manner and to the same 
extent as other corporations organized under the laws of that 
State which are transacting a similar character of business. 
The shares of stock in such corporation shall also be subject 
to tax as the personal property of the owners or holders 
thereof in the same manner and to the same extent as the 
shares of stock in similar State corporations : Provided, how- 
ever, That such shares owned by nonresidents of any State 
shall be taxed only in the city or town in which the corpora- 
tion's home office is located, and not elsewhere. 

"Any corporation organized under the provisions of this 
section may at any time within the two years next previous 
to the date of the expiration of its corporate existence, by a 
vote of the shareholders owning two-thirds of its stock, apply 
to the Federal Reserve Board for its approval to extend the 
period of its corporate existence for a term of not more than 
twenty years, and upon certified approval of the Federal Re- 
serve Board such corporation shall have its corporate exist- 
ence for such extended period unless sooner dissolved by the 
act of the shareholders owning two-thirds of its stock, or by 
an act of Congress or unless its franchise becomes forfeited 
by some violation of law. 

"Any bank or banking institution principally engaged in a 
foreign business incorporated by special law of any State or 
of the United States or organized under the general laws of 
any State or of the United States and having an unimpaired 
capital sufficient to entitle it to become a corporation under 
the provisions of this section may by the vote of the share- 
holders owning not less than two-thirds of the capital stock 
of such bank or banking association, with the approval of the 
Federal Reserve Board, be converted into a Federal corpora- 
tion of the kind authorized by this section with any name 
approved by the Federal Reserve Board: Provided, however, 
That said conversion shall not be in contravention of the 
State law. In such case the articles of association and organi- 
zation certificate may be executed by a majority of the direc- 
tors of the bank or banking institution, and the certificate 
shall declare that the owners of at least two-thirds of the 



AMERICAN BANKS IN FOREIGN TRADE 327 

capital stock have authorized the directors to make such certi- 
ficate and to change or convert the bank or banking institution 
into a Federal corporation. A majority of the directors, after 
executing the articles of association and the organization 
certificate, shall have power to execute all other papers and 
to do whatever may be required to make its organization 
perfect and complete as a Federal corporation. The shares 
of any such corporation may continue to be for the same 
amount each as they were before the conversion, and the 
directors may continue to be directors of the corporation until 
others are elected or appointed in accordance with the pro- 
visions of this section. When the Federal Reserve Board has 
given to such corporation a certificate that the provisions of 
this section have been complied with, such corporation and 
all its stockholders, officers, and employes, shall have the 
same powers and privileges, and shall be subject to the same 
duties, liabilities, and regulations, in all respects, as shall 
have been prescribed by this section for corporations origi- 
nally organized hereunder. 

"Every officer, director, clerk, employee, or agent of any 
corporation organized under this section who embezzles, ab- 
stracts, or willfully misapplies any of the moneys, funds, 
credits, securities, evidences of indebtedness or assets of any 
character of such corporation ; or who, without authority from 
the directors, issues or puts forth any certificate of deposit, 
draws any order or bill of exchange, makes any acceptance, 
assigns any note, bond, debenture, draft, bill of exchange, 
mortgage, judgment, or decree ; or who makes any false entry 
in any book, report, or statement of such corporation with 
intent, in either case, to injure or defraud such corporation or 
any other company, body politic or corporate, or any indi- 
vidual person, or to deceive any officer of such corporation, 
the Federal Reserve Board, or any agent or examiner appoint- 
ed to examine the affairs of any such corporation ; and every 
receiver of any such corporation and every clerk or employee 
of such receiver who shall embezzle, abstract, or willfully 
misapply or wrongfully convert to his own use any moneys, 
funds, credits, or assets of any character which may come 
into his possession or under his control in the execution of 
his trust or the performance of the duties of his employment ; 
and every such receiver or clerk or employee of such receiver 
who shall, with intent to injure or defraud any person, body 



328 EXPORTING TO THE WORLD 

politic or corporate, or to deceive or mislead the Federal 
Reserve Board, or any agent or examiner appointed to ex- 
amine the affairs of such receiver, shall make any false entry 
in any book, report, or record of any matter connected with 
the duties of such receiver; and every person who with like 
intent aids or abets any officer, director, clerk, employee, or 
agent of any corporation organized under this section, or re- 
ceiver or clerk or employee of such receiver as aforesaid in 
any violation of this section, shall upon conviction thereof be 
imprisoned for not less than two years nor more than ten 
years, and may also be fined not more than $5,000, in the 
discretion of the court. 

"Whoever being connected in any capacity with any cor- 
poration organized under this section represents in any way 
that the United States is liable for the payment of any bond 
or other obligation, or the interest thereon, issued or incurred 
by any corporation organized hereunder, or that the United 
States incurs any liability in respect of any act or omission 
of the corporation, shall be punished by a fine of not more 
than $10,000 and by imprisonment for not more than five 
years." 

Passed the Senate September 9, 1919. 

Attest: GEORGE A. SANDERSON, Secretary. 

Passed the House of Representatives, November 7, 1919. 

Attest : WM. TYLER PAGE, Clerk. 

Making Investments 
In Foreign Countries 

Our commercial relations with other foreign countries should 
not cease with our mere desire to sell them what we have got. 
We must show a sincere interest in the development of their own 
countries as well. There are many countries in the world — par- 
ticularly in South America — that are still in a primitive stage of 
development. They need financial assistance for their internal 
improvements. They need highways, railroads, drainage sys- 
tems, water works, development of water power sites, and harbor 
improvements. We have been urged to keep away from making 
these investments in foreign countries; we have been told that 
the Germans tried it, and that the Germans failed. But they 
failed because they tried unscrupulous methods. They tried to 
jam "Made-in-Germany" goods down the throats of the people 
they helped with their gold. However, the policy of making 



AMERICAN BANKS IN FOREIGN TRADE 329 

investments seems to be a perfectly sound plan of coopera- 
tion. England's investments in Argentina, alone, are over 
two billion dollars, and yet without following the German 
method she has worked up the largest trade with Argentina 
of any other nation. 

Treaties join us with other nations of the world politically. 
They should join us commercially as well. Proof of our sin- 
cerity in the fulfillment of our moral obligations should not be 
given in words alone. It should be interpreted in deeds. There 
are many countries today that need capital for bettering their 
condition in life; for internal improvements that will make their 
people more prosperous, and more independent of poverty. Pros- 
perity at home depends very much on the prosperity of all 
classes. If the farmer has a poor crop, every other branch of 
industry will feel it. It is the same way with countries. 

If the nations with whom we wish to increase our business 
remain undeveloped, their buying power will remain undeveloped. 
If we use our reserve gold to develop the forests and agricul- 
ture of Chile, the mines of Peru, and Bolivia, and the minerals 
of Ecuador a wave of prosperity would soon sweep that section 
of the globe and we would feel it. The people of those countries 
would have more money with which to buy our wares, and what 
is more important, we would enjoy their friendship and confi- 
dence which is necessary in our relations with small nations. 

We must not go into the business of lending money to foreign 
nations with reckless abandon, however. We must proceed cau- 
tiously. 

In connection with this point the "New York Journal of 
Commerce" in an editorial said: 

"Almost every commercial nation in the world is today looking 
to the United States as the source of its supply of necessary 
capital for investment. East as well as West, the situation is 
the same. It is pointed out by representatives of each country 
that after-war conditions render self-dependence impossible and 
that a -surplus of imports over exports is practically necessary 
if the national economic interest and well-being is to be preserved 
and its progress is to continue. There are a few parts of the 
earth where this demand is not felt and which expect and wish 
to go on selling us more than they import. Most of these regions 
are in South America and they represent sections of trade which 
are hardly more for the greater part, than of secondary desira- 



330 EXPORTING TO THE WORLD 

bility. The opposite condition — that which calls for more im- 
ports from us than it can supply exports to us — is more generally 
characteristic. It is a situation of first importance to our future 
financial and investment policy as well as to our own trade. 

".What the present international position of affairs really sig- 
nifies is that the United States is offered practically its choice 
of the -investments of the world. Countries which cannot pay 
us by return shipments of goods — as most cannot — would give 
us securities, a share of their future prospects and development. 
This is a natural outcome of the great exertions made by the 
European countries .during the war. They cannot supply the 
fluid capital needed either by their own citizens or by the inhabi- 
tants of the newer countries, and the latter accordingly turn to 
us for direct shipments of goods which they will settle in securi- 
ties since they cannot pay in return shipments of goods or money. 
Not all these calls can, however, be heeded. We have not the 
surplus wealth to satisfy them if we would, and we would or 
ought not to do so if we could, since such action would imply 
still greater sacrifice on the part of our consuming public at 
home, with higher prices and still greater industrial difficulties 
than must now be met. As things stand, we must pick and 
choose our fields of activity abroad, and must not only select 
desirable fields of investment in the several countries but must 
also discriminate between the countries themselves. 

"The problem of international investment now presented is 
not, however, simple or susceptible of solution by ordinary 
methods. What it involves is really the selection of spheres of 
trade or commercial influence. We cannot control the trade of 
the world and ought not to try to do so even if it were possible. 
Foreign capital, in the future as in the past, will implant itself 
beside our own and compete with it. Our interest on invest- 
ments and the eventual liquidation of our principal must be 
paid largely in the products of the countries to which we now 
entrust our surplus funds. Wise choice of fields of investments 
will consider, therefore, not only the immediate safety, security 
and productiveness of our funds, but also the probability that 
future political conditions in the countries where we place such 
funds will be stable, future commercial opportunities encourag- 
ing and future export trade likely to grow rather than to decline. 
We can easily place our loans or advances where they encounter 



AMERICAN BANKS IN FOREIGN TRADE 331 

an unfriendly atmosphere, have to suffer from hostile or dis- 
couraging conditions, or be considered merely a temporary help 
instead of the foundation of a permanent business relationship. 
Investments of such a kind, even if scrupulously repaid, princi- 
pal and interest, would be largely wasted. They would fail of 
attaining their chief international significance since they would 
not have laid the foundation for future business." 

Foreign Investments 
Create Permanent Market 

The virtue of making foreign investments lies in the fact that 
they lay the foundation for permanent and future business. If 
some South American country, for instance, borrows money 
with which to build a railroad, in all probability some American 
factory will furnish the rails, another the cars and locomotives, 
and still another the structural machinery. We make our in- 
vestments in this form, and take in return the stocks and bonds of 
the railroad. Our home industries are influenced by the purchase 
of these foreign securities by the creation of a market for their 
products. 

It is difficult, however, to induce American investors to place 
their money in foreign securities unless they are assured of the 
soundness of the loan. It is no easy matter to induce investors 
to place their money in isolated districts within the United States 
proper, let alone thousands of miles away in an unknown land 
with strange customs, different laws and commercial habits. 
Before the practice of making investments in foreign countries 
becomes a popular one, therefore, it will be necessary to show 
the American investor that it is just as simple and safe to loan 
out money in Argentina, or in South Africa as it is in any part 
of the United States. He must, however, have complete infor- 
mation from every angle so that the barrier of prejudice may 
be completely reduced. He must know something about the 
character of the people he is asked to do business with. He must 
know something about their daily habits of life, whether they 
are industrious, thrifty and honest. He must be fully informed 
as to the stability of the government and the sincerity of those 
who are at the head of it. When he has been given all this in- 
formation then it is time to interest him in the matter of making 
proper investments in foreign countries. 



332 EXPORTING TO THE WORLD 

The American people must become active in foreign fields. 
We are already leading the way in exportations. We should now 
help our customers financially if they need help. If we have the 
capital which would make industry hum in a country which has 
been apparently indifferent to industrial progress we should 
place it at the disposal of that country as long as it complies with 
the conditions. We can make our own country richer by making 
our neighbors richer. If we increase the purchasing power of 
the people about us, it will mean that the factories in the 
United States will have more to do. 



CHAPTER XX 
OUR MERCHANT MARINE 

It has been said that a great merchant marine is not as neces- 
sary toward the building of a foreign trade as many suspect it to 
be. We hear people upon all sides declare that before the war 
when our merchant marine was practically a negligible quantity 
in comparison to the merchant fleets of other nations we were able 
to secure trade in foreign nations in spite of the handicap. There 
is some truth in this, of course. It is true that we shipped our 
merchandise in foreign holds without suffering from such prac- 
tice, and it is also sound to declare that our foreign trade can 
keep on thriving without the assistance of a great merchant 
marine to carry our goods. It has been done before ; naturally, 
it can be done again. 

But times are changing. We are no longer a small nation 
around the corner taking care of occasional orders coming from 
a foreign land. We are now expanding. Our sign is out on the 
front door reading: "Uncle Sam, World Trader." We must ren- 
der service to our new made customers. If we do not some other 
trader will. It was all very well for us to permit a great bulk 
of our merchandise to be carried in the ships of our competitors 
when our national policy did not justify greater activity in 
world commerce. But the war woke up the American people. 
Without a merchant fleet we found ourselves in the throes of 
the German submarine peril. For a time our business, without 
the use of the ships that were at our disposal before the 
war, was being shattered to pieces because we could not get 
tonnage in which to carry merchandise. We turned then to 
the logical program : to build our own ships, and we have 
been building them ever since. 

The building up of a merchant marine is a step forward. 
Failure to maintain our shipping policy in one form or another 
— whether under private or Government direction — means a 

333 



334 EXPORTING TO THE WORLD 

step backward, regardless of what we were able to do without 
a merchant marine before the War broke out. 

Europe's Advantage 
in Ship 7 c linage 

Before the war Europe enjoyed a great advantage over the 
United States in that she had direct steamship connections with 
all section of the world. Peoples from other sections of the 
globe chose to go to Europe because they received better trans- 
portation accommodations. There were faster steamers con- 
necting European ports with those of other countries. Mail and 
freight steamers sailed from one port to the other more fre- 
quently. As a result the people from other continents pre- 
ferred Europe rather than the United States. The frequency 
of sailings made matters very easy for the Englishman who 
wished to visit his branch office in the East Indies or in South 
America. The frequency of the mails made it possible for the 
European merchant to keep in close touch with his customers 
overseas. These advantages the American merchant did not en- 
joy, and the lack of them isolated him from the rest of the) 
world. 

A merchant marine should have a definite object. If our only 
reason for having a merchant marine is to carry our own mer- 
chandise to foreign countries then a merchant marine is not a 
necessary institution. We can revert back to the pre-war days, 
and permit other nations to carry our wares, and we can continue 
to develop our foreign business. But there is a definite object 
in having an American merchant marine. It must render 
service. America must establish fast lines between the prin- 
cipal ports of the world. She must send the mails to distant 
ports faster than they were ever sent before. She must have 
frequent sailings not only of freight steamers but mail and 
passenger vessels as well. If we are to co-operate with our 
enterprising foreign trade merchants we must be able to ex- 
tend them the facilities of a modern up-to-date delivery and 
transportation system just as we have done within the borders 
of our own country. A merchant marine will do this. 

Speaking before the Sixth National Foreign Trade Convention 
Frederick J. Koster, President of the San Francisco Chamber of 
Commerce said: 



OUR MERCHANT MARINE 335 

"We need in large measure our own national delivery system, 
and definite trade routes must be established, with large com- 
bination freight and passenger ships, with regular scheduled 
sailings by direct routes between important American and foreign 
ports in all directions, so that American shippers in any section 
of our country may have the benefit of through transportation 
to any important port in the world. This will mean that our rail- 
road carriers will constitute a part of a transportation system 
that does not end at coasts. The time must come when, .at every 
railroad station in our country, time-tables, schedules and inform- 
ation will be obtainable by any shipper concerning the route and 
the cost of carriage to every port in the world. 

"These things are not only possible, but they are absolutely 
necessary, and they mean as much to the people of the interior 
of our country as to those who live nearer the coasts." 

Spectacular Growth 
cf Merchant Marine 

The United States in 1914 was represented in the trade of 
the world by fifteen seagoing vessels with registers ranging 
above 1,000 tons. 

According to figures of the United States Shipping Board 
issued in August 29, 1919, the United States boasted of 1,280 
vessels. Before the war she was down at the bottom of the 
column, so to speak. The merchandise of American manu- 
facturers and exporters was carried in the holds of foreign 
shipowners. Today it is being carried in holds owned by the 
United States to a great extent. 

In June 1914, the total gross tonnage of ships flying the Ameri- 
can flag, including coastwise shipping and the fleet operating 
on the Great Lakes, was 4,287,000 tons. 

In June 1919, its gross tonnage was 11,983,000 tons, an in- 
crease of 278 per cent, chiefly in oceangoing vessels. 

The steam tonnage under the American flag is now 24.8 per 
cent of the steam tonnage of the world. The figures are shown 
in the following tables: 

The world steam tonnage of 100 gross tons and over on June 
30, 1919, as reported by Lloyds was: 

Number of vessels 24,3S'6 

Gross tonnage 47,897,000 

Deadweight tonnage 71,845,000 



336 EXPORTING TO THE WORLD 

American tonnage of 100 gross tons and over on June 30, 
1919, including tonnage on Great Lakes, was: 

Number of vessels 3,687 

Gross tonnage. 11,983,000 

Deadweight tonnage 17,974,000 

Per cent of world steam tonnage of 100 gross tons and over 
under United States flag, June 30, 1919 : 

Percent of number 15.1 

Percent of tonnage 24.8 

(These percentage figures include tonnage on the Great Lakes). 

How Other Countries 
Suffered During War 

The foregoing figures show how the United States improved 
her position in shipping during the war, and practically out- 
distanced all rivals in shipbuilding activities. Now let us turn 
for a moment to see what happened to Great Britain. Great 
Britain on August 1, 1914, possessed 18,691,000 gross tons of 
shipping, lost during the war 8,785,000 gross tons. At the sign- 
ing of the armistice, November 11, 1918, her total tonnage was 
15,006,000 gross tons. 

Germany in 1914, possessed 5,135,000 tons of shipping. Her 
losses amounted to 2,700,000 tons. Her replacement by new con- 
struction and seizure of enemy ships was 950,000 tons. Her 
fleet at the time of the armistice amounted to 3,385,000 tons. 

In 1914 Japan's shipping totalled 1,708,000 tons. She lost 
275,000 tons. She built 885,000 tons and in November, 1918 
possessed a total of 2,318,000 tons, showing a net gain of 610,000 
tons. By the elimination of the German merchant fleet, Japan 
now stands third in the list of maritime nations. 

The British colonies lost 275,000 tons of shipping during the 
war. They replaced 475,000 tons and increased their merchant 
fleet from 1,632,000 tons to 1,8*32,000 tons, a net gain of 200,000 
tons. 

Holland showed at the close of the war a net gain of 335,000 
tons. Her total fleet increased from 1,472,000 to 1,807,000 tons. 
Her replacement was 560,000 tons. 

Norway lost 175,000 tons out of 1,957,000 tons. Although 
she made a replacement of 775,000 tons she showed at the end 
of the war only 1,557,000 tons, incurring a net loss of 400 tons. 
Norway is now in seventh place as a maritime nation. 



OUR MERCHANT MARINE 337 

France had 1,923,000 tons in 1914. She lost 905,000 tons, re- 
placed 425,000 tons. With a net loss of 480,000 tons she showed 
at the end of the war 1,143,000 tons of shipping. 

Italy was a heavy loser. At the beginning of the war Italy 
boasted of 1,430,000 tons for her foreign commerce. Of this 
she lost 857,000 tons. Her replacement was 375,000 tons, and 
after the war she had only 930,000 tons with which to do busi- 
ness with foreign countries. Her total loss was 500,000 tons. 

The total world tonnage in 1914 was 42,146,000 tons. 

The total world losses during the war were 18,286,000 tons. 

The total world replacement was 15,049,000 tons 

The total world net loss was 3,237,000 tons. 

Total tonnage of world, Nov., 1918, 28,309,000 tons. 

The foregoing statistics very closely show how the United 
States stands today in the shipping industry with respect to the 
other nations of the world. 

Ocean Routes That 
Vessels Follow 

The American merchant marine is constantly adding new trade 
routes to its schedule and it is said that American ships may 
now be seen on 41 world routes. 

The chief ones may be said to fall into the following divisions : 

(A) From the northeastern ports of the United States to the 
British Channel. — This route connects the leading commercial 
nations of the globe, and over it passes not far from twenty per 
cent, of the total tonnage of the world. Skirting the United 
States seaboard to the Newfoundland Banks, it then curves 
across the Atlantic. Branching off at various points of this 
route, other lines touch ports of Europe from the Mediterranean 
to the Baltic, and ports of America from the Caribbean Sea to 
Canada. 

(B) From the eastern seaboard of the United States, and from 
southern and western Europe, through the Mediterranean and 
the Suez Canal to China, Japan and the East Indies. 

(C) The South African route. — Connecting Atlantic ports of 
America and Europe with the southern, eastern and western 
coasts of Africa, and with New Zealand and Australia. Sailing 
vessels also use this route for connections with the Orient and 
the East Indies, their inability to navigate the Red Sea barring 
the Suez Canal route to them. 



338 EXPORTING TO THE WORLD 

(D) The South American route, from North Atlantic to South 
American, east and west coast, ports. 

(E) The route around South America, connecting American 
and European Atlantic ports with the Pacific coast to the Americas. 

(F) The Gulf and Caribbean route, affording access to the 
ports of the United States Gulf Coast, Mexico, Central America, 
the north coast of South America, and the West Indies. 

(G) The Pacific route, connecting North America with Asia, 
over which an extensive trade with China, Japan and the Phi- 
lippines is carried on. 

(H) From the North American Pacific coast to New Zealand, 
Australia and the South Sea islands. 

(I) The Panama Canal route, the development of the use of 
which promises to be rapid and extensive with the relief from 
the abnormal conditions created by the war. European trade 
with the west coast of North and .South America, and America's 
Atlantic and Gulf trade with the Pacific coast and the Orient, can 
be expected to move to an increasing degree by way of Panama. 

History of American 
Merchant Marine 

Briefly, we may trace the growth of our shipping back to 
the colonial period when Massachusetts owned about one sea- 
going vessel for every hundred inhabitants. 

During the Revolution, the colonies unable to build a navy, 
through the lack of funds, commissioned hundreds of priva- 
teers, which, manned by able seamen, furnished an enviable 
chapter to American naval history. After the war, however, 
the merchant marine had a difficult struggle to keep alive. 
The situation became acute when a British order-in-council 
prohibited the purchase of American-made vessels. This 
order was issued in spite of the fact that America at that 
time could build ships at less cost than in England. 

In 1789, the Constitutional Government immediately came 
to the rescue of the merchant marine. Congress passed a law 
providing for a reduction of 10 percent in the duties laid upon 
imports when carried by American ships. Another measure 
laid a tax of 6 cents on American-built ships if owned by 
Americans, 30 cents if owned by foreigners, and 50 cents if 
foreign-built and foreign-owned. 



OUR MERCHANT MARINE 339 

This legislation had an almost immediate effect. The regis- 
tered tonnage in the foreign trade increased from 123,893 tons 
in 1789 to 346,254 in 1790, and in 1794 the registered tonnage 
reached a total of 438, 863 tons. The effect on the transpor- 
tation of imports in American vessels was also encouraging. 
In 1789 the percentage of imports carried in American bot- 
toms was 17.5 percent, 41 in 1790, 58 in 1791, 67 in 1792, 82 in 
1793 and 91 in 1794. 

Our merchant marine experienced a set-back again at the 
time of the French Revolution in 1800, when those in power 
in France had difficulties with the Administration in Wash- 
ington. As a result French privateers broke loose in the 
West Indies, and began a bitter campaign against American 
vessels. For self protection, the Government established a 
navy department, and naval warfare immediately began on 
French ships that attacked our commerce. A series of Amer- 
ican victories on the high seas soon convinced the French 
Government that it was a better policy to leave American 
shipping alone. 

During the years preceding* the War of 1812, there was no 
letup on attacks on American shipping. France and England 
established blockades aimed to injure American commerce. A 
British order-in-council forbade neutrals to trade with France, 
and France retaliated with orders of her own, all of which 
were aimed to cripple our growing merchant marine. Eng- 
land's claim to the right of impressment caused the seizure 
and confiscation of millions of dollars worth of American ves- 
sels and cargoes, and thousands of captured American seamen 
w T ere forced to serve under the British flag against their will. 

As a measure of self protection, the famous Embargo Act 
of December 22, 1807, was enacted. Instead of protecting and 
saving American commerce the Embargo, after being in force 
for 15 months, cost the United States more than $100,000,000, 
and nearly wiped out of existence the shipping and shipbuild- 
ing industries. Then the war came, and another series of 
brilliant victories by American armed merchant-men over 
British warships was recorded. 



340 EXPORTING TO THE WORLD 

American Shipping 
' Thrived in 1810 

It is interesting to note that the tonnage of American ves- 
sels engaged in foreign trade in 1810 — 980,000 tons — was 100,- 
000 tons greater than the paper figures for 1910, and not more 
than two-thirds of the total at this later date was engaged in 
foreign commerce. 

The size of our merchant marine at this period encouraged 
Congress to the belief that it could be further developed by 
j letting the bars down on some of the restrictions placed on 
jthe importation of merchandise to this country. Consequent- 
ly, in 1815, Congress passed the Reciprocity Act removing 
tonnage and preferential duties laid upon imports, but it had 
little effect at the time as the nations that ordinarily would 
have taken advantage of this Act, were too> busy developing 
their own business at home. However, when the Act was 
renewed in 1828, there was a general acceptance, as 
Europe was now in a better position to pay attention to its 
foreign commerce. Competition became very keen, and not 
to the advantage of American shipping. 

The Era of Steam 
Navigation Arrives 

In 1819, the Savannah, the first steam vessel to cross the 
Atlantic, inaugurated the era of the steamship, which has 
played such an important part in the history and development 
of commerce in these modern days. From that date the de- 
velopment of the steamer was rapid. Lines were established 
in all parts of Europe; steam vessels plyed along the Atlantic 
coast of the United States; lines were inaugurated to the 
West Indies. It was not until 1836, however, that the present 
great trans-Atlantic service had its beginning. In that year, 
Junius Smith, an American organized the British and Amer- 
ican Steamship Navigation Company, and chartered a 700-ton 
steamer, the Sirius, for the first trip across the Atlantic. Then 
the Great Western Railroad, in the same year, sent the Great 
Western (1,320 tons) across the Atlantic on her initial trip. 

But steam navigation did not pay in those days, so Samuel 
Cunard, of Halifax, conceived the idea of obtaining a subsidy 



OUR MERCHANT MARINE 341 

of $425,000 annually from the British government, and founded 
the Cunard Line which is operating to this day. The first 
ship of the line crossed in 1840. The subsidy was later in- 
creased to $850,000 and the western terminus was moved from 
Boston to New York, where it is still located. The British 
Government, recognizing almost instantly the value of aiding 
and cooperating with the shipping industry, extended aid to 
other lines running to the West Indies, South America, Aus- 
tralia and India. 

In the meantime, the United States remained idle in the 
matter of assisting American shipping. The most encourag- 
ing step taken at this time was the establishment of a mail 
subsidy in 1845, resulting in the starting of two lines to Eur- 
ope, on one of which was operated the finest steamer on the 
trans-Atlantic route. About the" same time contracts were 
made with other companies operating lines to the West Indies 
and other points north of the Panama Canal. In 1855, Con- 
gress repealed the mail subsidy, and the American merchant 
marine again suffered a set-back. The trans-Atlantic lines 
were suspended and their business was taken over by British 
interests. 

The final blow to American shipping was given during the 
Civil War, when foreign commerce decreased, insurance rates 
went up, wages soared, firemen and seamen went into the 
navy, and American capital was used to develop enterprises 
of a more assuring return. In the meantime, European na- 
tions began a keen competition in the carrying trade, with 
Great Britain in the lead. The leading maritime nations of 
that time were Great Britain, France, Germany, Belgium, 
Holland, Austria, Italy, Spain, Norway and Sweden. Regis- 
tered tonnage in the United States steadily decreased until 
1898, when it was 726,213 tons— the lowest for nearly 100 
years. 

Again Shipping 
Industry Is Revive® 

In 1910, it rose to 782,517 tons. The Panama Act of 1912 
providing for the registry of foreign-built vessels not more 
than five years old, and the Shipping Act of 1914 removing 
this age limit caused a gain of over 600,000 tons to American 
shipping, and when the War broke out American shipping 



342 EXPORTING TO THE WORLD 

once more had a splendid opportunity of leading the world. 
In 1915, there was passed the Seaman's bill calling for in- 
creased wages and other conditions on American vessels. 
American shipowners, protesting, declared that they could 
not successfully compete against foreign interests under these 
conditions, and consequently a number of companies sold out 
to foreign concerns. 

However, the demands made upon shipping by the War 
were too great to consider obstacles, and from this date rapid 
strides were made in American shipping. 

In 1916 a new era in the history of the American merchant 
marine was inaugurated with the creation of the Shipping 
Board with wide powers to operate a corporation to build, buy 
or lease vessels or merchant ships. In the language of the 
Third Annual Report of the United States Shipping Board the 
functions of that organization are described as follows: 

"The United States Shipping Board served as the agency 
through which the problems of shipping control were hand- 
led, and the war powers of the United States in the field of 
transportation were administered. It regulated all the ship- 
ping of the country ; repaired the seized German ships ; re- 
cruited and trained officers and seamen for merchant vessels ; 
supervised the chartering of all ships (foreign and domestic) 
from American ports ; developed port facilities ; handled large 
problems of labor control; and operated, directly or through 
private shipping agencies, a vast merchant marine." 

The Shipping Board's activities in the movement of troops 
are described as follows: 

"One of the accomplishments of America's participation 
in the World War was the movement of 2,000,000 troops 
overseas, with the elaborate supply of munitions, material, 
and food necessary for maintaining these troops at a high 
point of efficiency. 

"In all its efforts for the acquisition and the creation of 
new tonnage, the Board's uppermost thought was needs of 
the Army. German vessels were taken over by the Board, 
and the huge task of repairing and putting them into Army 
service was quickly done ; Dutch ships in our ports were 
acquired; many neutral vessels were chartered from Norway, 
Sweden, and Denmark; Japanese steamers were acquired 
in considerable number by purchase; all American steamers 




Before the Civil War America led the maritime nations of the world. 
American clipper ships outsailed all others. The quantity and quality 
of the output of American shipyards was unexcelled. Before the Great 
War, however, American sea-going tonnage represented barely two per 

cent, of the world's total. 



OUR MERCHANT MARINE 343 

available for the Nation's use were requisitioned; Lake ships 
were reconstructed and brought to the seaboard, and a very 
extensive shipbuilding program was launched. 

"On November 1, 1918, the total tonnage in active service 
controlled by the United States Shipping Board, amounted to 
1,196 vessels of 6,540,205 deadweight tons. This included 
requisitioned tonnage, time chartered neutral, and seized Ger- 
man vessels. Of this total, 598 vessels of 4,269,838 dead- 
weight tonnage were in the direct service of the Army and 
Navy. These carried troops and supplies to European ports. 
This was the situation at the signing of the armistice on No- 
vember 11, 1918." 

The Shipping Board's authority to even restrict the trans- 
fer of American vessels to foreign registery without permis- 
sion is contained in Section 9 of the Shipping Act of 1916, 
providing that when the United States is at war or during 
any national emergency, the existence of which is declared 
by proclamation of the President, it shall be unlawful, without 
first obtaining the approval of the Board, to sell, mortgage, 
or lease any vessel documented under the laws of the United 
States or to transfer any such vessel to a foreign registry or 
flag. On June 4, 1918, the measure was made more difficult 
by entirely withholding permission to American vessels of 
more than 100 tons gross registry to pass to any foreign flag. 

On December 12, 1918, it was decided to authorize the sale 
of wooden vessels then under construction in American ship- 
yards to foreign-owmed American corporations and to for- 
eigners without restriction, excepting to enemy ownership, 
and the transfer of all such documented tonnage to foreign- 
owned American corporations, providing such transfers were 
not inconsistent with national interests ; also the sale of all 
documented wooden vessels to foreigners with the privilege to 
transfer to buyer's flag in exceptional cases only, after care- 
fully considering each case on its merits. This policy was 
modified gradually until wooden vessels were permitted to 
pass to foreign registeries unless there appeared to be some 
good reason why the transfers should not be approved. 

The Board's policy toward the disposal of American iron 
and steel tonnage to foreign flags was somewhat different. It 
says in the annual report: 

"This marked relaxation of policy did not apply to the 



244 EXPORTING TO THE WORLD 

transfer of American iron or steel tonnage to foreign flags, 
as to uncertainty of the international situation generally, the 
duty of the United States to provide proper transportation 
facilities for the return of American soldiers from overseas, 
and its moral obligation to carry food to the starving peoples 
of Europe made it manifestly unwise to part with the control 
of such desirable shipping." 

The Shipping Board was authorized on July 18, 1918, by 
an amendment to the Shipping Act, to assume control over 
construction for foreign account. The amendment provided 
that when the United States is at war or when a national 
emergency has been proclaimed by the President, the con- 
struction or transfer of a vessel to foreign register was pro- 
hibited unless under approval of the Shipping Board. This 
amendment was rigidly enforced until the signing of the ar- 
mistice, but on November 11, 1918, the Board lifted this ban 
and permitted unlimited construction of wooden tonnage for 
American or foreign account and steel tonnage for American 
account. On June 14, 1919, all restrictions were lifted when 
Chairman Hurley advised all shipyards in the United States 
that construction of steel ships for foreign account would be 
permitted upon presentation of all contracts to the Board. 

Future of American 
Merchant Marine 

As to a bright future for the American merchant marine 
there seems to be no doubt. The entire country is united in 
its opinion that there must be an American-owned merchant 
marine to carry the increased tonnage of merchandise, to 
blaze new water trails to all parts of the world, and to re- 
awaken the enthusiasm of the old days for a commercial fleet 
flying the American flag. At this writing as the United States 
Shipping Board has discontinued its shipbuilding activities, 
and has cancelled its contracts with private shipbuilding- 
yards, an encouraging feature of our shipbuilding industry 
is seen in the renewed vigor with which these private yards 
have gone after business. At the end of the year 1919, a 
most encouraging report of the activities of private shipyards 
was issued by the Atlantic Coast Shipbuilders' Association 
which said in part: 



OUR MERCHANT MARINE 345 

"American shipyards, instead of falling back as govern- 
ment contracts are suspended, cancelled or completed, are 
forging steadily ahead. Work for private accounts is replac- 
ing that which was being done for the Shipping Board and 
although a number of orders for American industries have 
been completed or withdrawn, the shipyards today are build- 
ing over a quarter of a million gross tons more than they 
were a month ago and nearly half a million tons more than 
in October. The total now under construction, exclusive of all 
government work, is 805,000 gross tons, the equivalent of 
more than 1,200,000 deadweight tons of sea-going vessels. 

"This steady advance is only one of the encouraging fea- 
tures in the development of the American shipbuilding in- 
dustry. The shipbuilders, themselves, continue to show faith 
in the future of the American merchant marine by taking over 
contracts given up by the Shipping Board and will com- 
plete the partially constructed vessels in the expectation of 
finding a market for them. Conditions indicate that they 
are justified in the belief that there will be a continued de- 
mand for American tonnage. 

America Capable of 
Quantity Production 

"As matters stand today, the United States is the only 
nation in the world in a position to supply merchant vessels 
quickly and in quantity. The British shipyards are tied up 
with orders for two years to come. Other foreign countries 
are unable to supply the home demand and are seeking torn- 
nage elsewhere. There is nowhere to place orders for prompt 
delivery but in the United States, and only the unfavorable 
position of the exchange and in the insistence upon long- 
term credits are keeping back a flood of foreign orders. 

"The factor of speedy delivery is a powerful asset for 
American shipyards. Leading British shipbuilders who have 
visited the principal plants in the United States frankly admit 
that the output here is at the rate of two to three times that 
of the British yards. This means that, shipway for shipway, 
this country can produce double to treble the tonnage that 
Great Britain can. Furthermore, with the great rapidity of 



346 EXPORTING TO THE WORLD 

turnover, the American shipbuilding industry is getting so 
much more service out of its plants that this factor will result- 
in a marked lessening of production costs that will enable 
the United States to meet England's prices, which are at 
present lower because of cheaper labor. 

'That speed of production, due largely to the employment 
of more modern methods and the greater use of labor-saving 
devices than in Britain, has not lessened the quality of Ameri- 
can-built ships, is plainly manifest. Since the Armistice* 
Lloyd's Register of Shipping, a British institution, has super- 
vised the complete construction of nearly 600 steel steamers 
in United States yards and has rated every one of them 100- 
Al, the highest class given. 

''The showing of the American yards is the more remark- 
able in that of 152 ships now being constructed for private 
account only one is on foreign order. At present, therefore, 
American industry is providing practically 100 per cent of 
the work being done, in spite of the fact that the Shipping 
Board is trying to dispose of hundreds of completed ships 
on liberal credit terms." 

Government Activities 
in Shipping Industry 

Thus, we have seen how American shipping is progressing 
by private enterprise, while at the same time there seems 
to be much uncertainty as to what the United States Ship- 
ping Board will do with the immense tonnage it has under 
its control. When the war ended the Board returned certain 
ships to their original owners; allocated others to different 
routes to be operated by private interests under certain con- 
ditions prescribed by the Board, and at the present writing 
an outright sale to American concerns, and to foreign inter- 
ests under certain restrictions is in progress. What the 
future activities of the Shipping Board shall be rests with 
Congress. Measures are now under discussion in Wash- 
ington tor the preservation in some form or other of a vig- 
orous government shipping policy. There appears to be con- 
siderable opposition to a government-owned and operated 
merchant marine. But while there is a wide divergence of 



OUR MERCHANT MARINE 347 

opinion in this regard, nevertheless, in justice to the Con- 
gress, it must be said that there is an evident determination 
in that body to develop our opportunities on the sea to the 
utmost in the future. It seems evident, therefore, that the 
bulk of our commerce will probably be carried in ships priv- 
ately owned and operated as opposed to government owner- 
ship. The only thing that private interes f s ask of the 
government is the removal of certain restrictions that prevent 
them from successfully competing with foreign countries, and 
the enactment of legislation that will not only encourage the 
industry but to help it place itself on a permanent basis. 

As a writer recently said : "It is generally recognized that the 
permanent development of our merchant marine can be best 
accomplished through private ownership and operation. Com- 
petition in the field of over-seas trade, in normal times on the 
economic basis of profit, from services rendered, demands a 
measure of individual initiative, freedom of judgment and 
breadth of experience that cannot be had under government 
control. It would seem clear that the only basis on which 
new capital may be made available for the development of our 
merchant marine is the prospect of earning reasonable returns 
on the investment. Before a broad field of investment can 
be made available to the shipping industry, however, the 
■) lality and security of ship mortgages, which are now sub- 
ject to a variety of prior liens, must be improved and stand- 
ardized. Furthermore, to assure American shipping a more 
nearly equal basis of competition with foreign shipping, some 
modification of restrictions imposed by our navigation laws, 
which tend to increase unduly the relative cost of operation, 
may well be considered.'* 

With government assistance and cooperation, a privately 
owned and operated American merchant marine seems to be 
the logical policy at the present time. With changing con- 
ditions the world over, this is a time for individual initiative 
and enterprise and, in which a cumbersome Government 
organization lacking the qualities required in such efforts 
as the present time demands, would be out of place. 



348 EXPORTING TO THE WORLD 

How Vessels 
are Measured 

The methods of measuring the capacity of a ship are con- 
fusing to many. In concluding this chapter it seems 
appropriate to give a brief explanation of these methods. 

Ships are measured by three different methods. 

(a) Displacement tonnage. 

(b) Dead-weight tonnage. 

(c) Register tonnage. 

Displacement tonnage : The weight of the volume of water 
which the ship will displace when fully loaded with crew, 
coal for steaming purposes, supplies, etc., on board. This 
method is in use by the navies of the world, and assures 
accuracy and uniformity. 

Dead-weight tonnage : The actual weight of the cargo 
which a merchant ship can transport. This method is adap- 
ted only to vessels that carry homogeneous bulk cargoes, 
and not to passenger vessels or vessels carrying miscella- 
neous cargoes. 

Register tonnage : Expressed in terms of gross tonnage 
and net tonnage. Gross register tonnage represents the 
entire cubical space of a merchant vessel. It is obtained by 
dividing the total interior capacity of a ship by 100. Net 
register tonnage represents the remainder of the tonnage 
after the sum of exempted spaces is deducted from the gross 
tonnage. Exempted space includes officers' and crew 
quarters, engines, boilers, and machinery, etc. The net ton- 
nage may be said to be the portion of the ship which pro- 
duces income by its capacity to carry cargo and passengers. 



CHAPTER XXI 
HOW GOVERNMENT HELPS EXPORTER 

The object of the Bureau of Foreign and Domestic Commerce 
of the United States Department of Commerce is to assist Amer- 
ican manufacturers and exporters in the extension of their for- 
eign trade. It has been said by American merchants that the 
British and the German governments do more for their manu- 
facturers and exporters in the matter of co-operating to obtain 
foreign business than any other nations in the world; it is in- 
teresting to note, however, that the same complaints have been 
made by German and British interests against their own govern- 
ments in which the United States has been held up as an example 
to the governing authorities. 

There is no question that the United States government has 
made a commendable start in extending its activities to foreign 
countries where competent officials may gather data and informa- 
tion for American industry that is beginning to realize more and 
more than ever before the necessity of extending operations to 
all corners of the globe. The service that the government 
offers is extensive. It compiles reports from all sections of the 
world. It sends out special trade commissioners to obtain specific 
information regarding commercial conditions and opportuni- 
ties for American merchants. It maintains commercial at- 
taches in the principal trade centers of the world. . Through 
the Consular service it is able to supply American manufac- 
turers with constant reports of commercial conditions and 
other important information for the use of American shippers. 

Perhaps, the most important service rendered by the Bureau 
of Foreign and Domestic Commerce is that through Commerce 
Reports, a small daily bulletin compiled from reports sent in from 
all sections of the world by consular agents and special investi- 
gators. Names and addresses of foreign concerns desiring to 
make connections with American manufacturers and exporters 
may be obtained through Commerce Reports. This bulletin is 

349 



350 EXPORTING TO THE WORLD 

very complete in the information that it gives to those interested. 
The latest news regarding the developments in industry and for- 
eign trade may be found here. Many articles appearing in this 
bulletin are general in character, but often valuable con- 
tributions dealing with specific lines of goods may be found 
therein. 

The bureau also issues annual reports compiled by consular 
officers, which are supplements to Commerce Reports and 
which contain reviews of the trade and industry of the con- 
sular districts during the year. Manufacturers and exporters 
who subscribe to this branch of the government service value 
these supplements highly as they show the general commer- 
cial conditions as well as the statistics of imports and exports 
of the particular articles that enter into the foreign commerce 
of the districts discussed. These statistics often serve as a 
basis for American shippers in arriving at a decision to enter 
a certain field with a certain line of merchandise. 

Reports of Specified 
Products Valuable 

A very valuable service is rendered in the distribution of 
monographs on foreign markets for specified products showing 
the trade conditions, the extent of foreign competition, and the 
methods of entering the market. These reports are prepared by 
experts in their line who devote months of study to the subject in 
hand. Upon publication these reports are placed on sale at 
nominal cost and are very much sought by those interested in 
the specific lines in which they deal. An idea of the subject cov- 
ered in these reports may be obtained by the following titles of 
a number of monograms now ready for distribution : "Cotton 
Goods in Latin-America," "Shoe and Leather Trade in the United 
Kingdom," "Shoe and Leather Trade in Germany," "Cotton 
Goods in Russia," "Philippine Market for American Lumber," 
"Commercial Organizations in Switzerland," "Central America 
as an Export Field," etc. 

Concerning the methods of obtaining trade information a bul- 
letin of the bureau has this to say : "The greater part of the in- 
formation is obtained from three sources: the Consular Service, 
which includes more than 300 consuls and many consular agents ; 



HOW GOVERNMENT HELPS EXPORTER 351 

the Trade Commissioners, who study special industries in spec- 
ific countries ; and the Commercial Attaches, who are stationed 
in the principal countries and give all their time to commercial 
investigations. In addition, the statistics of American trade with 
foreign countries are collected at American customhouses in co- 
operation with the Treasury Department. 

"Information from all these sources is forwarded to Wash- 
ington and is distributed chiefly through the Bureau's publica- 
tions, which may be classified as regular, or periodical, publi- 
cations and as special bulletins or monographs. These are for 
sale by the District and Cooperative Offices of the Bureau and 
by the Superintendent of Documents, Government Printing 
Office, Washington, D. C." 

Regular Publications 
of the Bureau 

The regular publications of the Bureau are the Commerce 
Reports which are mailed daily ; the quarterly volume with index 
and the quarterly index. 

The Monthly Summary of Commerce and Finance is sold for 
a nominal yearly subscription. 

The Quarterly statement contains statistics of imported mer- 
chandise entered for consumption and is sold for a nominal 
yearly subscription. 

The Statistical Abstract is an annual publication. 

Commerce and Navigation is an annual publication containing 
such information as imports of merchandise by articles and 
countries ; exports of domestic merchandise by articles and coun- 
tries ; imports entered for consumption, etc. 

The Chief of the Bureau of Foreign and Domestic Commerce 
issues a valuable annual report. 

Among the free publications is one called Exports of Domestic 
breadsturls, cottonseed oil, etc., a monthly bulletin as well as a 
monthly report of total values of imports and exports. 

Special Bulletins 
of the Bureau 

The special bulletins of the Bureau are divided into five 
groups : (a) Special Agent Series, which comprise monographs 
on special industries and special phases of commerce, prepared 



352 EXPORTING TO THE WORLD 

by the commercial agents or trade commissioners ; (b) Special 
Consular Reports ; (c) Miscellaneous Series ; (d) Foreign Tar- 
iff Series; and (e) Industrial Standards. 

The last named is a new series recently undertaken by the 
Bureau. It consists of standard specifications for industrial 
materials that have been prepared by the Government and by 
technical societies and other organizations, and accurate and 
reliable translations of them into foreign languages. The pur- 
pose of these publications is to facilitate commerce between the 
United States and foreign countries by translating and making 
available standard specifications for material of various kinds, 
commercially acceptable and representing practice. Sixty-two 
standard specifications of the American Society for Testing 
Materials have been translated into Spanish and are printed with 
the Spanish and English texts on facing pages. 

Bureau Serves as 
Information Depot 

Additional information of value to the American manufacturer 
or exporter on subjects of general importance may be obtained 
by applying to the branches of the Bureau located in some of 
the principal cities of the United States. With respect to this 
service a recent pamphlet of the Bureau has this to say: 

"By applying to the Bureau you can get tariff rates in force 
in foreign countries, which, in conjunction with freight rates, 
will enable you to determine the price at which your goods can 
be sold. It is particularly important to know this if you are com- 
peting with a native product, or if you are shipping to countries 
which give preferential rates of duties to the goods of other coun- 
tries. It is also important that you know the basis on which 
duties are levied, as tariff rates have a direct and vital bearing 
upon problems of packing and shipping. In some countries, if 
several articles are packed in one container, the entire shipment 
will carry the highest rate that applies to any one article in the 
lot. In other countries the duties are levied on the gross weight, 
and it is important to make the packing as light as is consistent 
with safe transit. In still other countries duties are levied on 
the net weight, which includes the article itself and the imme- 
diate container in which the article is placed, but not the weight 
of the outside case or crate. 

"In writing for information in regard to foreign rates of duty, 



HOW GOVERNMENT HELPS EXPORTER 353 

it is necessary to give a detailed description of the article in- 
volved and to specify the particular country or countries for 
which tariff information is desired. It is advisable to confine in- 
quiries to information needed immediately rather than to ask 
for comprehensive statements for future reference, which may 
be out of date by the time they are used. 

"You may obtain information regarding license fees for com- 
mercial travelers and customs treatment of their samples. These 
topics should be carefully considered if you contemplate sending 
a traveling representative to foreign countries. 

"You can get consular regulations which prescribe the number 
of copies of the bill of lading that must be transmitted for the 
use of the customs, the number of consular invoices that must be 
prepared, and the way in which they must be prepared. 

"You can get information regarding international revenue 
taxes that are imposed in foreign countries, so that you may 
know whether your product will be subject to an additional tax 
after it enters the country. 

"Information is available on foreign trade-marks and patents, 
so that you may protect your patents and trade-marks in foreign 
countries. 

"You can obtain information on foreign export embargoes, 
import prohibitions and restrictions, and black lists. Knowledge 
of these regulations is especially important at present. (This re- 
fers to war-time conditions.)" 

How District Offices 
May Help Exporter 

The Bureau also explains in a pamphlet how the district of- 
fices may help those desiring information on foreign trade. It 
says: 

"District offices of the Bureau of Foreign and Domestic Com- 
merce were established to expedite the distribution of commercial 
information to ascertain the needs of the business men of the 
country, and to establish closer co-operation between govern- 
ment and private agencies interested in the extension of foreign 
trade. 

"Each district office has on file confidential information re- 
garding trade opportunities, lists of importers in foreign coun- 
tries, trade directories, etc. 

"Each district office receives specifications, samples, exhibits, 



354 EXPORTING TO THE WORLD 

etc., for a limited time, and these may be inspected by interested 
persons. 

"Each district office arranges conferences between exporters 
and consular officers and commercial agents when the latter visit 
district offices during leave absence in this country. 

"Each district office makes a special study of the needs of the 
district in which it is located, and the Bureau endeavors to equip 
each of its district offices to meet the demands peculiar to their 
fields. 

"Each district office keeps on file all publications of the Bureau, 
as well as publications of other branches of the government, that 
will be of assistance to American exporters. Each office acts as 
sales agent for the Superintendent of Documents, Washington, 
D. C, for the sale of the Bureau's publications." 

How to Use Trade 
Opportunity Service 

Mention has already been made of the Trade Opportunity 
Service that the Bureau offers to exporters. It should be noted 
that the names and addresses of the foreign importers desiring 
the goods are not given in the Commerce Reports but are fur- 
nished to bona fide American firms upon application to the 
Bureau at Washington or any of the district offices. 

In applying for such names and addresses the inquirer need 
refer only to the number of the announcement as published in 
the Commerce Reports. A separate applicationn on the firm's 
letterhead should be made for each "opportunity" desired. 

When the confidential information furnished regarding an op- 
portunity for sales in foreign countries is too detailed to be given 
in a "trade opportunity" announcement, it is embodied in a con- 
fidential bulletin or circular, which is sent to firms that are listed 
in the Exporters' Index maintained by the Bureau and its dis- 
trict offices. 

Those listed on the Exporters' Index receive the following 
service : 

"Confidential circulars and bulletins of various sorts relating 
to inquirers' particular lines. 

"The calling of firm's attention to special articles in Com- 
merce Reports containing requests for special catalogues of 
firm's line, or relating to markets for firm's product. 



HOW GOVERNMENT HELPS EXPORTER 355 

Firm is advised regarding trade opportunities for the sale 
of its product. 

Firm's name is furnished to foreign inquirers asking for Amer- 
ican sources of merchandise and supplies. 

Firms are given prompt notice of every special bulletin pub- 
lished by the Bureau. 

Firms desiring to be recorded on the Exporters' Index must 
fill out a form, stating the nature of its business and the kinds 
of goods manufactured or exported. These forms to be received 
at the district offices. 

Branch offices 
of the bureau 

The bureau operates branch offices for the convenience of 
exporters in the following cities : 

New York, 734 Custom House ; Chicago, 504 Federal Building ; 
Boston, 1801 Custom House; St. Louis, 402 Third National 
Bank Building; New Orleans, 1020 Hibernia Bank Building; 
San Francisco, 307 Custom House; Seattle, 848 Henry Building. 

Besides these branches the Bureau maintains co-operative 
offices in the following places : 

Cleveland Chamber of Commerce; Philadelphia Chamber of 
Commerce ; Cincinnati Chamber of Commerce ; Los Angeles 
Chamber of Commerce; Chattanooga, Southern Railway System, 
South American Agent; Portland (Oregon) Chamber of Com- 
merce ; Dayton, Ohio, Greater Dayton Association, and the South- 
ern Railway, Cincinnati, 96 Ingalls Building. 

American Consuls as 
Trade Representatives 

American Consuls are government officials serving for the 
benefit of American commerce primarily. They are not sup- 
posed to serve any particular individual or set of individuals. 
The information they obtain as to commerce and trade in foreign 
countries is for all the people that are interested in it. It has 
already been stated how American consuls send in regular reports 
to the Bureau of Foreign and Domestic Commerce which are 
later published in Commerce Reports and other publications of 
the department. This is an invaluable service which private 
enterprise would find difficult to duplicate. 

Consuls are supposed to remain in certain fields for a term 



356 EXPORTING TO THE WORLD 

the length of which is determined by the authorities in Washing- 
ton. Sometimes consuls are moved about from one country to 
the other with reckless abandon. The writer knows of one 
veteran in the Consular Service who has been in seven different 
countries within the last seven years. The moment he became 
acquainted with the customs and practices of the people of one 
country he was transferred to another country where he had to 
begin all over. The language he had learned in the former 
country was of no use to him in the latter. Why these constant 
transfers are made is a question which the authorities in Wash- 
ington alone can answer. There is no question that it cripples the 
service and that it reduces efficiency. It takes time to learn 
the customs, language, the laws and the modes of living of 
the people of a foreign country, and this is essential when 
consuls are expected to be thoroughly capable of rendering 
comprehensive and authentic reports on business conditions 
for the study of American business men. 

Another thing that has been the subject of considerable com- 
plaint is the poor pay that is given the members of our Consular 
service. Poor pay naturally attracts applicants of an undesirable 
standard as a rule, but it must be said in justice to our present 
consular staff that the majority of them are men of the highest 
type who have performed admirable service in spite of the handi- 
caps they have been put to because of the inadequate pay they 
receive. This important point was touched upon by Edward 
Prizer, President of the Vacuum Oil Company in an address 
before the Sixth National Foreign Trade Convention when he 
said: 

"Another demand business should make on the government 
is that our consular service should become a real and definite 
annex of foreign trade effort. 

"When I first came in contact with our foreign consuls some 
thirty years ago, I found they regarded themselves as the favorites 
of political circumstance; they knew their positions were not 
permanent and took more interest in social than in business 
activities. Some of them really seemed to regard insistence on 
help in solving commercial problems as an interruption of their 
leisure. 

"There has been a great improvement since then, for during 
the past fifteen years the personnel of our consular service has 
been mainly comprised of substantial, educated and well-informed 
men, who take a great interest in their work, and I take pleasure 



HOW GOVERNMENT HELPS EXPORTER 357 

in stating that our company's organizations throughout the 
world have found these men willing and useful. 

"We should insistently demand that our consular service should 
be in every particular so organized as relates to permanence of 
employment, compensation and promotion, that entrance into it 
will be zealously sought by our young men of greatest capability 
and promise. 

"One of the real deterents to young men of this type seeking 
consularships is the financial consideration— the pay is entirely 
inadequate. 

"American consuls cannot be effective in a foreign country un- 
less they can meet influential people on an equality, instead of 
being compelled, as is now frequently the case because of finan- 
cial reasons, to live as an outsider from social life and merely a 
sojourner in the land where they are supposed to be efficient rep- 
resentatives of a rich and powerful nation. 

"They should not be required to meet unavoidable living ex- 
penses out of personal income, but should be so paid that they 
are in a position to meet on an equality influential government 
officials and the heads of industrial and merchandising firms and 
representative citizens in the country to which they are accredited. 

"The British government is fully alive to the need of proper 
and well-paid consular representation, for it has just announced 
that it proposes to expend annually 1,000,000 pounds for consuls 
and an additional quarter of a million pounds for commercial 
attaches. 

"Our consular service should be safeguarded from the blight- 
ing shadow of political control or preference, and there should 
run through it to the remotest sections of the world the certainty 
that capability is prized and that merit will be recognized and re- 
warded. It should be trained in business conditions and methods, 
and encouraged to be constantly alert to business opportunities 
for American industry. Periodical consular reports of a general 
character, while interesting and helpful, are not alone sufficient. 
There must be concreteness of information and directness of 
support. 

"A gentleman told me that at a certain South American port he 
found great difficulty in obtaining any really useful information 
to assist his sales effort ; so almost in despair, he appealed to the 
German consul ,who courteously aided him in his dilemma. He 
found this consul had prepared a complete card index of com- 
mercial conditions. It covered not only the usual statistics of 



358 EXPORTING TO THE WORLD 

imports, consumption, etc., but went into such intimate details as 
to the standing and credit of individual merchants, lines of 
products they already handled, or might be induced to carry. It 
was his practice to send to his government at home all this in- 
formation which was available for the German exporter. What 
was being done by him at this port was doubtless being dupli- 
cated at hundreds of other centres of commercial opportunity. 
''We should demand that our consular service be run on busi- 
ness lines and principles, and controlled by executives of business 
vision and grasp ; and then that the politicians be forced to keep 
their hands off whether an administration changes or continues." 

How to Make Use of 
Consular Service 

Don't write to the consul in a foreign country for information 
unless you have made inquiry at the Bureau of Foreign and Do- 
mestic Commerce in any one of its branches in this country. 
Perhaps the information you may desire is already gathered for 
you. The Bureau has thousands of reports on business and com- 
mercial conditions in foreign countries of a general character; it 
has also a great number of reports of a specific nature which 
have been prepared by trade commissioners who are experts in 
the lines they were sent out to make reports on. Perhaps one 
of these reports is just the thing you may need, so do not write 
to the consul until vou have first tried the Bureau. 

Letters should not be addressed to consuls personally. The 
address should be the American Consul or the American Consul 
General. This is necessary in order to avoid delay in receiving 
replies to inquiries. The consul may be away on his vacation 
and the letter, if addressed to him personally, will not be opened 
until he returns. Also, when communicating with consuls the 
writer should be sure that sufficient postage is placed on the en- 
velope otherwise the consul must pay double the amount due for 
such negligence. No return postage is necessary for letters re- 
quiring answers as all answers are made through the Depart- 
ment of State. 

Emphasis must also be made on the fact that consuls are not 
in the employ of private individuals but in the service of the 
United States Government. In this capacity they cannot be ex- 
pected to make sales for manufacturers or to show samples to 
prospective customers in an effort to obtain orders. They are 



HOW GOVERNMENT HELPS EXPORTER 359 

prohibited from doing this. Consuls, however, may distribute 
catalogues for manufacturers without prejudicing their official 
position. This is a form of co-operation that they are only too 
willing to extend, but very few manufacturers take advantage 
cf the opportunity to advertise their merchandise by this method. 
Above all, it must be remembered that consuls are very busy 
men. They have a great many duties to perform; they have re- 
ports to make; they have a routine to follow almost every day, 
and they must not be disturbed by needless inquiries or requests. 
The consular service is a great machinery for the development 
of American business abroad. Its proper handling will bring 
the desired results. 

Other sources of 
Export Information 

It must be remembered that there are other sources of 
information besides the Bureau of Foreign and Domestic Com- 
merce, where American manufacturers and exporters may 
obtain data in connection with foreign trade. These sources 
are gradually growing. There are at present in the United 
States many organizations directly afrd exclusively inter- 
ested in the development of trade in foreign countries. Their 
chief functions are to obtain reliable information as to oppor- 
tunities, conditions, credits, legislation, etc. Other organi- 
zations, more directly interested in domestic affairs, have 
established foreign trade departments whose functions are 
to keep their members in close touch with conditions abroad. 

The following organizations are of invaluable service to 
those interested in foreign trade: 

The National Foreign Trade Council, New York City. 

The American Manufacturers' Export Association, New 
York City. 

The Philadelphia Commercial Museum, Philadelphia. 

The United States Chamber of Commerce, Washington, 
D. C. 

The Pan-American Union, Washington, D. C. 

Chambers of Commerce in the various cities of the United 
States added foreign trade departments to enable their mem- 
bers to obtain information from foreign fields. Some of 
these organizations are: 



360 EXPORTING TO THE WORLD 

The Chamber of Commerce of New York; the Chambers 
of Commerce of San Francisco, Los Angeles, and San Diego, 
California ; Portland, Oregon ; Seattle,, Washington ; St. Louis, 
Missouri; Detroit, Michigan; Cleveland, Ohio; New Orleans, 
Louisiana; Atlanta, Georgia, etc. 

Then there are the Merchant's Association of New York 
City, the Pittsburgh Foreign Trade Commission, the Mass- 
achusetts State Industrial Commission, Boston, the Chicago^ 
Association of Commerce, and numerous other organizations 
of a similar character that devote considerable attention to for- 
eign trade. The growing number of combination Chambers of 
Commerce and associations in this country should not be 
overlooked. For instance, there is an Argentine-American 
Chamber of Commerec in New York City; a Chilian-Ameri- 
can commercial association in the same city. Similar org- 
anizations interested in trade with various European and 
Far Eastern countries are rapidly taking shape. 

Certain foreign countries are following the example of the 
United States in sending commercial attaches to foreign 
fields. In New York City there may be found commercial 
representatives from European and Latin American countries 
from whom valuable information may be obtained. 

Trade Journals Must 
Not Be Overlooked 

Manufacturers and exporters should subscribe to all reliable 
trade publications. In these may be found invaluable infor- 
mation dealing with methods, changes, markets, conditions, 
etc. 

Among these journals may be mentioned 

The World's Markets The American Export 

Export Trade Monthly. 

Pan- Pacific 
Exporters and Importers 

T , Commercial America 

Journal A . 

t> . Asia - 

The Exporters Review T , XT , , „ . 

F I he Nations Business 

The Americas. Weekly Export Bulletin 

Pacific 'Ports. Commerce and Finance 

There are a few magazines whose functions are not to 
exclusively cover the foreign field, but who occasionally pub- 



HOW GOVERNMENT HELPS EXPORTER 361 

lish articles of importance to exporters. Among these may- 
be mentioned "Printers' Ink," "The World's Work," "Sys- 
tem," etc. 

Book Exporters 
Should Have 

An exporter should have a well equipped library. There 
are many directories and encyclopedias now on the market 
that should be on the shelves of a well regulated export 
office. Among these are : 

The Stateman's Year Book, Macmillan Co. Annual. New 
York. 

Exporters' Encyclopedia . Exporters' Encyclopedia Co. 
Annual. New York. 

American Export Trade Directory. Johnson Export Pub- 
lishing Co., New York. 

Customs Tariffs of the World. Kelly Publishing Co., New 
York. 

A few choice books on Foreign Trade like the following 
should also be included: 

Practical Exporting. Hough. 

Exporting to Latin America. Filsinger. 

Principles of Foreign Trade. Savay. 

American Methods in Foreign Trade. Vedder. 

Business Training Corporation (Set 10 volumes). 

Selling Latin America. Aughinbaugh. 

Ocean Traffic and Trade. Hough. 

History of Foreign and Domestic Commerce of United 
States. Johnson. 

Commerce and Industry. Smith. 

Trade of the World. Whelpley. 

The Theory and Practice of International Commerce. Wolfe. 

Official Report of National Foreign Trade Council. 

Nor should a good atlas be overlooked for the library. 

Some of these are: 

Atlas of the World's Commerce. Bartholomew. 

Geographical Manual and Atlas. Mawson. 

To complete the list, all the publications of the Bureau of 
Foreign and Domestic Commerce should be included. 



Chapter XXII 
THE WORLD'S MARKETS 

The world is preparing for peace. The Great War hardly 
over, the nations of the world are hastening as fast as possible 
the readjustment that comes after the conflict. They are taking 
stock of the future. The adjusters have not yet finished their 
estimates of the losses that the great catastrophe produced. The 
money cost alone has been over $100,000,000,000. The human 
cost has been enormous. Millions of men have been slain: 
women and children have lost their lives by the thousands. 
Entire countries have been laid waste. Production has been 
stopped. Old nations have lost their former positions; new 
nations have sprung up ; old trade routes have been aban- 
doned, and new ones have grown up in their stead. 

In this period of readjustment the United States is taking 
an important part. This country is helping Europe get back 
on her feet. We are financing big enterprises over there; 
we are sending foodstuffs and other materials of absolute 
necessity. Those nations, for years to come, will require 
material assistance in one form or another. 

As our trade has expanded to other sections of the globe, 
we have learned that Europe is not alone in her need of 
foodstuffs and manufactured materials as well as capital from 
outside sources. There is still considerable development 
work to be undertaken in other continents. Mineral resources 
of unlimited value are yet to be tapped; transportation facili- 
ties such as the building of railroads, highways, canals, etc., 
are needed in the backward countries. Where American 
concerns are to participate in this kind of work, the develop- 
ment of trade is sure to follow. We are capable of manu- 
facturing all the tools necessary for such enterprises, and 
one can readily see the importance of participating in these 
vast improvements. 

The use of modern methods of farming, of business, and 

382 



THE WORLD'S MARKETS 363 

of industry, is also helping to improve the markets in foreign 
countries for American manufactured articles. We are now 
selling farm tractors in places where only the most primitive 
methods had been used in the past. We are selling type- 
writers to countries where such an instrument has not been 
as generally adopted for business purposes as in the United 
States. We. are also furnishing machinery for various in- 
dustries to replace the old and antequated processes of man- 
ufacture. We are sending to the four corners of the earth 
articles aimed to increase the comfort of those who buy from 
us. We are introducing American-made automobiles in every 
country. The popularity of American manufactures is ap- 
parent. 

The aim of this chapter is to review as briefly as possi- 
ble, the markets in foreign countries available to manufac- 
turers and exporters. Obviously, a detailed description of 
conditions in foreign countries is impossible in a chapter, but, 
perhaps, a brief summary of the available markets will be 
sufficient to enable the reader to obtain a general idea of the 
immensity of the field in which the manufacturer and exporter 
can operate. 

A study of the market divisions follows. For the purposes 
of this study Latin-America will be grouped in the following 
manner : 

Latin America 

Groupe I. (b) Peru. 

(a) Mexico. ( c ) Bolivia. 

(b) The West Indies. /<j\ chile. 

(c) Central America. ~ TTT 
; i \ ^ i t • Group III. 

(d) Colombia. , . . 

, . , 7 « (a) Argentina. 

(e) Venezuela. v ' & 

(f) The Guianas, ( b ^ Uruguay. 

(g) Panama. ( c ) Para S ua y. 
Group II. Group IV. 

(a) Ecuador. (a) Brazil. 

Mexico 

Mexico ranks fifth among the nations of the western hem- 
isphere in size. It follows Canada, the United States, Brazil 
and Argentina. In population it ranks third, following the 



364 EXPORTING TO THE WORLD 

United States and Brazil. The total area of the country is 
about 767,000 square miles, and its population in 1910 was 
15,063,207. Of these 20 per cent are white, 37 per cent Indian, 
and 43 per cent of mixed blood. There are over 100,000 for- 
eigners in the country, 20,000 of whom are Spaniards and 
30,000 Americans. 

The climate of the country may be divided into three zones 
which cover three ascending geographical regions. The low- 
est is comprised of the coast region embracing the eastern 
and western coastal plains which reach an altitude of 3,000 
feet. Above this altitude and up to 6,000 feet the second 
or middle zone is located. The climate here is mild. Above 
the 6,000-foot altitude is found the tierra fria, or cold land. 
During the summer in the lower zone the heat is intense and 
unhealthful, and the only measure of relief may be found 
near the coasts where the ocean breezes are encountered. The 
mean annual temperature in this zone is from 75 to 85 degrees. 

The most delightful region of all is the middle zone which en- 
joys a temperate climate. There is very little humidity here; 
the air is dry, and cool, and the climate is healthful. The mean 
annual temperature ranges from 60 to 77 degrees. The cold 
zone covering altitudes from 6,000 to 9,000 feet has a wide 
nnge of temperature. In the higher regions there is a wet 
and dry season. The wet season begins in June and lasts 
until October, although it is not continuous. 

Mexico is one of the richest countries in minerals in the 
world. For the last four centuries she has produced nearly 
one-half of the world's silver, and now she is producing about 
one-third of the world's total output. 

Metals found in Mexico are platinum, gold, silver, copper, 

zinc, lead, iron, mercury, manganese, antimony, tin, bismuth, 

and tellurium. An idea of Mexico's mineral production may 

be gained from the following table showing the value of the 

most important metals expressed in terms of pesos (about 

50 cents) : 

Pesos. 

Gold 48,428,841 

Silver 76,405,754 

Copper 26.172,214 

Lead 6,808,465 

Coal (estimate) 4,400,000 



THE WORLD'S MARKETS 365 

Pesos. 

Petroleum (estimate) 2,800,000 

Iron (estimate) 1,200,000 

Zinc (estimate) 1,150,000 

Mexico's agricultural resources are far from being fully 
developed. Over 600,000 square miles of the entire country 
are capable of being turned into great producing regions. 
Lack of transportation, antique methods of farming, and the 
scarcity of farm machinery have kept Mexico back in agri- 
culture, but the outlook is encouraging as the government is 
now lending its aid to the industry, and the importation of 
farm machinery from the United States is increasing. With 
the development of transportation, Mexico's agricultural riches 
should be enormous. Mexico's principal agricultural products 
are maize, cotton, henequen, wheat, sugar and molasses, spir- 
its, coffee, and beans. Encouragement is offered by the gov- 
ernment for the growing of tobacco, rubber, cacao, chicle and 
vanilla. . The vanilla of Mexio is of a very high quality and 
has a large demand in foreign countries. 

The most important industries of the country are the manu- 
facture of textiles, sugar, alcohol, and cigars and cigarettes. 
Ten years ago there were 142 cotton factories in the country. 
The oil industry in the Tampico district is by far one of 
the most important of all Mexico's resources. Mexico is 
next to the United States in the production of crude 
petroleum. 

Principal exports from the United States to Mexico are 
coal, lumber, cotton, boots and shoes, automobiles, electrical 
machinery, steel rails, structural steel, electrical instruments, 
pipes and fittings, meat products, cottonseed oil. 

Statistics of Mexico's foreign commerce for a period of nine 
years follow : 

Year. Imports. Exports. 

1910 $ 97,433,000 $130,023,000 

1911 102,937,000 146,877,000 

1912 91,331,000 148,994,000 

1913 97,886,000 150,203,000 

1914 72,000,000 150,000,000 

1915 63,000,000 126,000,000 

1916 83,000,000 158,000,000 



366 EXPORTING TO THE WORLD 

Year. Imports. Exports. 

1917 138,000,000 182,000,000 

1918 192,000,000 228,000,000 

When peace is completely restored in Mexico she will resume 
her old place as one of Uncle Sam's biggest customers. Mil- 
lions of dollars of American capital are invested in the Southern 
Republic, thousands of American citizens are living in the country 
and only because of the unsettled state of her politics has Mex- 
ico failed to resume her old position as a great buyer of Ameri- 
can goods. In spite of troubled conditions statistics show that 
for the seven months ending in July, 1919, Mexico purchased 
$75,568,000 worth of merchandise from the United States 
which is more than the value of the goods sold to Brazil or 
Chili. 

The West Indies 

The total area of the West Indies is estimated at 100,000 
square miles ; it has a population of about 9,000,000. The West 
Indies consist of the great archipelago extending from Flor- 
ida to the northern coast of South America. The islands in- 
clude the Bahamas, Greater Antilles, Lesser Antilles, includ- 
ing: the Leeward Islands and the Windward and Caribee Isl- 
ands, the Trinidad-Tobago group, and the Keys or coral reefs. 

The Greater Antilles include the islands of Cuba, Porto 
Rico, Haiti and Jamaica. 

The Bahamas include 670 islands and islets, with a total 
population of 65,000. 

The Lesser Antilles extend from the Anegada Passage south 
to Trinidad. 

The climate of the West Indies is tropical, except in the 
Bahamas and in the uplands of the larger islands. Rainfall 
varies from 31 to 114 inches. In autumn hurricanes visit 
the islands. The inhabitants are chiefly negroes and mulat- 
toes, except in Cuba and Porto Rico where the Spaniards and 
Americans predominate. 

Politically, the West Indies may be divided into the Repub- 
lics of Cuba, Santo Domingo and Haiti, the American posses- 
sion of Porto Rico, the British West Indies, French West 
Indies, Dutch West Indies, and the American possession of 
the Virgin Islands. 

The British are in possession of Jamaica and dependencies, 



THE WORLD'S MARKETS 367 

the Bahamas, Leeward Islands of St. Christopher, Nevis, 
Montserrat, Antigua, and Dominica, the Windward Islands of 
St. Vincent, St. Lucia, Grenada and the Grenadines, Barbados, 
and Trinidad and Tobago. 

The French West Indies include St. Bartholomew, Guade- 
loupe, Martinique, and one-half of St. Martin. Fort de France 
is a naval station. 

The Dutch West Indies include one-half of St, Martin, St. 
Eustache, and Saba, near Porto Rico, antl a group off the 
Venezuelan coast including Curacao, Bonaire, and Aruba. 

The Virgin Islands, now belonging to the United States in- 
clude St. Thomas, St. Croix, St. John, Crab, and Culebra. St. 
Thomas is the principal island with an area of 140 square 
miles. 

The West Indies serve as a great market for the United 
States. In the fiscal year of 1916 they purchased $191,195,791 
worth of goods, as against $177,6^8,611 for South America. 
Cuba, of course, was the heaviest purchaser. During this 
same fiscal year the Islands purchased two-thirds as much as 
Asia and the East Indies, and four and one-half times as 
much as all of Africa. 

Located within easy shipping distance of American ports, 
the West Indies serve as a logical customer for American 
manufacturers and exporters. 

The growth of exports to this region is reflected in the 
following table: 

1915. 1918. 

Cuba $95,750,004 $227,156,047 

Porto Rico 44,318,161 54,043,349 

British West Indies. 13,948,820 21,432,437 

Dominican Republic. . 7,447,182 16,156,443 

Haiti 4,899,856 9,069,275 

French West Indies. 2,698,050 5,357,451 

Dutch West Indies.. 1,269,808 1,361,434 

Virgin Islands 882,442 1,640,130 



$170,914,333 $336,216,539 

The total for 1918 represents an increase of 97 per cent over 
that of 1915. 



368 EXPORTING TO THE WORLD 

Of all these regions, Cuba, of course, is the most promising- 
market. Her imports are more than equal to that of all of 
the other islands put together. Cuba's purchasing power 
has been greatly increased by the immense wealth derived 
from the sugar industry. The state of this industry has never 
been better in its history. The growing- demand for foreign 
made goads in Cuba is reflected in her imports for the follow- 
ing years: 

1914 $118,202,000 

1915 140,884,000 

1916 215,961,000 

1917 256,085,000 

The percent of the total imports of Cuba imported from the 
United States is shown in the following table: 

1914 .• 58.23% 

1915 67:35% 

1916 72.00% 

1917 74.00% 

Since the beginning of the Republic in 1902 the foreign 
commerce of Cuba has increased more than 200 per cent. 

Of the total foreign trade of Porto Rico, $137,683,304, that 
with the United States amounted to $124,460,747 in the fiscal 
year 1917-1918. Porto Rico's needs are for iron and steel 
manufactures, wheat flour, cotton cloths, shoes, automobiles, 
paper, etc. 

The Dominican Republic was taken over by the United 
States military authorities in 1916. Under military rule the 
country has made rapid progress in commerce, the total for 
1917 amounting to $40,026,394, an increase of 182.58 per cent 
over 1908. 

The Dominican Republic's principal imports from the 
United States are cotton cloths, shoes, iron and steel manu- 
factures, machinery, automobiles, oils, chemical products, 
wheat flour, meats, canned and preserved meats. 

The governments of Haiti and the United States signed a 
convention on July 1, 1916, authorizing the latter government 
to take charge of the collection of customs, the supervision 



THE WORLD'S MARKETS 369 

of the monetary system, and the administration of the finances 
of the Republic for a term of years. This action was taken 
on account of the unsettled political situation which had been 
retarding progress on the island. With the United States in 
virtual control there is an opportunity for developing the 
resources of the island, and the development of trade with 
the United States. For the fiscal year ended June 30, 1918, 
exports from the United States to Haiti were $8,359,922 as 
against $5,540,705 for 1914. 

Jamaica's trade with the United States is growing. Im- 
ports from the United States increased from 48 per cent of 
the total m 1914 to 70 per cent in 1917. Jamaica's principal 
imports from the United States are manufactured articles 
and foodstuffs. 

The United States has shown marked gains in trade with 
Trinidad and Tobago, increasing its exports to the Islands 
from 28 per cent of the total in 1914, to 35 per cent in 1916, 
For the fiscal year ended June 30, 1918, exports from the 
United States amounted to $6,997,946 as against $3,465,610 
for 1914. 

Exports from the United States to Barbados for the fiscal 
year ended June 30, 1918, were $2,701,156, compared with 
$1,412,934 for 1914. 

Those desiring to do business in Cuba will naturally es- 
tablish their headquarters in Havana, the principal city of the 
Island, and one of the most prosperous in Latin-America. 
Business in Haiti can be looked after from Port Au Prince. 

Central America 

The little republics of Central America are potentially rich 
in natural wealth. Not until stable governments are estab- 
lished in the majority of these little countries will it be ex- 
pedient for American business men to enlarge their activities 
in that region, however. Central America consists of Guate- 
mala, Honduras, Salvador, British Honduras Nicaragua, 
Costa Rica and Panama. 

The present population of Central America is estimated at 
between 6,000,000 and 7,000,000. 

The United States is the principal buyer of Central Ameri- 



370 EXPORTING TO THE WORLD 

can products as well as the principal source of supply. Ameri- 
can capital, also, is heavily invested in those countries, with 
the exception of British Honduras where British capital is in 
control of the lumber industry and in Guatemala where the 
Germans control the coffee industry. 

The principal exports by countries are as follows: Costa 
Rica and Honduras, bananas; Salvador and Guatemala, cof- 
fee; British Honduras, timber; Nicaragua, coffee and ba- 
nanas; Panama, bananas. 

South America as a Field 
for American Merchandise 

South America proper has been a lucrative field for American 
business for a good many years. There is a mistaken impres- 
sion in this country that South America only recently became a 
splendid market for American merchandise. This is not so. 
Statistics before the war — for many years before the war — show 
that the American business man has been very successful in the 
countries making up that great continent. Although encounter- 
ing the competition of German, British and French, merchan- 
dise produced in this country has been successfully sold in that 
vast region. The big boom in business with South America 
sprang up, however, when the business men of Europe closed 
their doors to engage in war. The South Americans then began 
to shop in the United States. Thousands of new customers were 
placed on the books of American manufacturers and exporters, 
and a great majority of these have become permanent clients. 

For the seven months ending in July, 1919, we sold to* 
South America $263,528,000 worth of merchandise as compared 
to $171,610,000 during the same period in 1918. This shows 
the rapidity with which the United States is developing trade 
relations with that continent. Argentina, Brazil and Chile are 
our biggest customers in that continent. 

The following is a summary of conditions in each country 
Colombia 

Colombia occupies the northwest corner of the South 
American continent. The area of this country is about 440,- 
846 square miles. Its climate is varied owing to its geo- 
graphic characteristics. Thus, in the lowlands the tempera- 
ture is from 74 to 86 degrees, while in the temperate zone the 



THE WORLD'S MARKETS 371 

annual mean varies from 62 to 72 degrees, and the climate 
is healthful. The valleys are hot, and rainfall is heavy on 
the coast. 

Colombia's mineral wealth is extensive. Gold forms a 
great part of her wealth. Practically all the emeralds of the 
world come from Colombia. The country is second to Rus- 
sia in the production of platinum which is in so much demand 
at the present time. Colombia has also copper, silver, lead, 
iron, mercury, coal and manganese while recent investigations 
have shown that the country has tremendous possibilities 
in the petroleum industry. 

The country's foreign trade for a period of eight years is 
reflected in the following table: 

Year. Imports. Exports. 

1910 $17,383,000 $17,625,000 

1911 1 8,109,000 22,376,000 

1912 23,965,000 32,222,000 

1913 28,635,000 34,315,000 

1914 20,979,000 32,633,000 

1915 17,840,000 31,579,000 

1916 28,922,000 40,000,000 

1917 23,334,000 40,531,000 

Principal exports from the United States are lard, flour, 
cotton goods, iron and steel manufactures, etc. 

The principal port is Cartagena which is an important com- 
mercial center. 

Venezuela 

Venezuela, lying along the north coast of South America, 
has a total area of about 393,976 square miles. Like Colombia, 
its variation of altitudes give it a wide range of climate. 

Gold, copper and iron supply Venezuela with most of its 
mineral wealth. Venezuela is also a fine agricultural country, 
practically one-fifth of the population being engaged in this 
industry. The principal product is coffee which grows in 
nearly every section of the Republic. In 1917 there were 
33,000 coffee plantations which had over 200 v 000 acres of land 
under cultivation. Cacoa, also, is extensively grown. Other 
agricultural products are sugar, tobacco, cotton and rubber. 
There is very little manufacturing in the country. 



372 EXPORTING TO THE WORLD 

The foreign trade of Venezuela is rapidly growing, and the 
United States is leading all other countries in the value of 
imports and exports with that country. 

The following table shows Venezuela's foreign trade for 
eight years : 

Year. Imports. Exports. 

1910 $12,388,000 $17,949,000 

1911 18,395,000 22,684,000 

1912 20,569,000 25,261,000 

1913 18,030,000 29,484,000 

1914 13,987,000 21,520,000 

1915 13,470,000 23,404,000 

1916 21,382,000 25,530,000 

1917 24,593,000 24,005,000 

The chief port of Venezuela is La Guayra. 

The Guianas 

The Guianas are British, Dutch and French Guiana. 

British Guiana has an area of 90,277 square miles and is 
situated on the north coast of South America, having Dutch 
Guiana, Brazil, and Venezuela on the east, south and west, 
respectively. 

British Guiana's mineral wealth is derived principally from 
gold which is washed in all the river valleys. Sugar canei 
and rice is grown extensively, and sugar, rum and molasses 
are manufactured. 

The inhabitants are chiefly Portuguese, negroes, Hindu 
coolies, and Chinese. The aborigines number about 8,000. 
The total population of the colony is about 350,000. 

The area of French Guiana is about 30,500 square miles. 
The capital and port is Cayenne. The principal industry is 
the growing of coffee and cacoa. 

Exports from the principal town of Dutch Guiana are bal- 
ata, sugar, gold, cacoa, bananas, coffee, timber and rum. Im- 
ports consist of manufactured articles, oils, drugs, chemicals, 
wines and liquors, and animals. 

The area is 46,142 square miles and the population, con- 
sisting of Portuguese and negroes, is about 92,000 of whom 
less than 1,000 are Europeans. 



THE WORLD'S MARKETS 373 



Ecuador 



The approximate area of the republic is 116,000 square 
miles, including the Galapagos Islands in the Pacific. 

The most important industry of the country is agriculture. 
Cacoa is the chief product while rubber is gaining fast. The 
yearly production amounts to 1,000,000 pounds. The low- 
lands of the country produce coffee, sugar, bananas, cotton, 
tobacco and vegetable ivory and in the upper regions cereals 
are grown. The country is making a start at cattle raising 
and sheep farming. 

While Ecuador is known to be rich in minerals little has 
been done to develop the mining industry. 

Ecuador's principal trade is with the United States, France 
and Great Britain, and since the opening of the Panama Canal 
trade between the United States and Ecuador has greatly 
increased. Ecuador is in need of manufactured articles, food- 
stuffs and woven goods. In 1916 imports from the United 
States amounted to $5,334,271. Guayaquil is the only im- 
portant port of the country. 

The population of the country is estimated at 2,000,000. 
Ecuador's foreign trade for a period of eight years is as 
follows : 

Year. Imports. Exports. 

1910 $11,489,000 $12,692,000 

1911 1 0,354,000 13,690,000 

1912 8,837,000 15,789,000 

1913 8,403,000 13,061,000 

1914 8,408,000 12,895,000 

1915 9,330,000 17,570,000 

1916 9,346,000 17,600,000 

1917 10,195,000 16,338,000 

Peru 

Peru is one of the richest countries on the west coast of 
South America, and presents the most favorable possibilities 
for the development of trade with the United States. 

The area of Peru is 695,733 square miles, and the popu- 
lation is about 5,000,000 inhabitants. 

Peru is rich in forestry, mining and agriculture. The most 
valuable of the Peruvian forests is rubber. 

Gold, silver, copper, petroleum, nitrates, vanadium, tung- 



374 EXPORTING TO THE WORLD 

sten, nickel, iron, sulphur, borax and peat furnish the min- 
eral wealth of the country. Among agricultural products 
sugar and cotton take the lead. 

The chief manufactures of the Country are cotton and 
woolen goods. The textile factories of Peru consume about 
5,000,000 pounds of cotton annually. 

Peru's principal imports are textiles of all kinds, wheat, 

lumber, coal, oils, wearing apparel, medicines and machinery. 

The United States leads in exports to that country, and the 

opportunity for further increasing our commerce is growing 

better, 

Peru's foreign trade for a period of years is : 

Year. Imports. Exports. 

1910 $24,206,000 $34,380,000 

1911 26,430,000 36,042,000 

1912 24,982,000 45,817,000 

1913 29,591,000 44,410,000 

1914. .'. 23,464,000 42,611,000 

1915 15,044,000 68,638,000 

1916 42,256,000 80,497,000 

1917 65,712,000 90,728,000 

Callao is the principal port but the biggest volume of busi- 
ness is transacted in Lima, the capital. 

Bolivia 

The area of Bolivia is about 708,195 square miles, and popu- 
lation about 2,900,000 of which about 50 per cent are Indians, 
25 per cent mixed Spanish and Indian, and 13 per cent white. 
The principal mineral products of Bolivia are tin, silver, 
gold, copper, iron, lead, zinc cobalt, platinum, antimony, bis- 
muth, and quicksilver. 

Bolivia's foreign trade from 1910 to 1917, inclusive, was: 
Year. Imports. Exports. 

1910 $19,033,000 $29,493,000 

1911 22,765,000 32,226,000 

1912 19,308,000 35,148,000 

1913 21,357,000 36,551,000 

1914 15,507,000 25,662,000 

1915 8,804,000 37,132,000 

1916 12,128,000 39,360,000 

1917 13,057,000 61,522,000 



THE WORLD'S MARKETS 375 

Bolivia has no seaport, and the only way to reach La Paz, 
the capital, is by rail from Mollendo, Peru, or from Antofa- 
gasta, Chile. 

Chile 

Chile is a promising market for American manufacturers 
and exporters. The most progressive country on the west 
coast of South America this republic is rapidly developing its 
resources, and is in constant need of manufactured wares 
which the United States is in a position to supply. Chile was 
a fine customer for British and German goods before the 
war broke out, but when those sources of supply were cut orr* 
she turned to this country where she found an ample supply 
of merchandise for her needs. 

The area of Chile is 307,620 square miles and population 
5,000,000. 

The world famous nitrate deposits in the northern part of 
Chile, and from the export duties on this product the repub- 
lic derives its principal income. 

The country is rich in agricultural lands, and the stock 
raising industry is growing rapidly- As a manufacturing 
country, Chile ranks among the first countries of South 
America. Her principal manufacturing industries are flour 
milling, tanning, smelting, brewing and distilling. Shoes, har- 
ness, textiles, clothing, furniture, cars and carriages, pottery 
and soap are also manufactured in the country. Chile, also, 
is one of the largest wine growing countries in the world. 
About 80,000,000 gallons of wine and spirits are produced 
annually. 

Trade with the United States has increased rapidly. In 
1908 imports from the United States amounted to $8,000,000 
as compared with $169,000,000 in 1917. 

Chile is one of the finest markets for American merchan- 
dise in South America. 

The importance of the country in foreign trade is reflected 
in the following statistics of her commerce: 

Year. Imports. Exports. 

1910 $108,582,000 $120,022,000 

1911 127,381,000 123,884,000 

1912 122,076,000 139,878,000 

1913 120,274,000 144,653,000 



376 EXPORTING TO THE WORLD 

Year. Imports. Exports. 

1914 98,461,000 109,381,000 

1915 55,922,000 119,530,000 

1916 81,220,000 187,458,000 

1917 129,603,000 259,985,000 

1918 799,625,000 

Valparaiso is the principal port of Chile, and while many 

importers maintain offices in this city, there are branches in 

Santiago, the capital. 

Argentina 

Next to Brazil, Argentina is the largest Republic in South 
America, having an area of 1,135,840 square miles. 

The population is about 7,900,000. 

The country derives its riches from its agriculture and 
stock raising. The principal crops are wheat, maize, and 
linseed. The sugar and wine industry are also extensive. 
There is very little mining in the country. The principal 
mineral product is petroleum which has been discovered in 
the southern part of the country. 

Of the 728,680,000 acres in Argentina, 253,195,000 acres are 
suitable for agriculture or stockraising. In 1917 the acreage 
and production of the four leading agricultural products were 
as follows: Wheat, 16,088,967 acres; corn, 8,968,851 acres; lin- 
seed, 3,207,414 acres; oats, 2,525,406 acres. 

Stock raising is second in importance to agriculture. The 
country is one of the greatest cattle regions of the world. 

In 1917, meat to the value of $132,400,000 was exported. 

Railroad development in Argentina has progressed rap- 
idly. In 1918 there were 21,858 miles of railway in operation, 
5,772 of which were state property. 

Buenos Aires, the largest city in South America, is the 
capital. Argentina is not a manufacturing region, although 
the industry is developing and opportunities for the sale of 
manufacturing machinery are growing. The principal indus- 
trial plants are sugar factories, wine depots, flour mills, brew- 
eries, and meat freezing depots. There is very little fuel to 
be had for manufacturing purposes; most of the coal comes 
from Great Britain and the United States. 

Argentina's commerce for a period of nine years was as 
follows : 



THE WORLD'S MARKETS 377 

Year. Imports. Exports. 

1910 351,771,000 372,626,000 

1911 366,811,000 324,697,000 

1912 361,853,000 480,391,000 

1913 421,352,000 483,504,000 

1914 271,818,000 349 ; 254,000 

1915 220,086,000 541,532,000 

1916 226,887,000 527,045,000 

1917 380,321,000 559,170,000 

1918 464,065,000 797,569,000 



Brazil 



Brazil is the largest country in South America, and the 
third largest in the world. An estimate of the total popula- 
tion in 1915 was 26,542,402, of which 45 per cent is European, 
32 per cent Indian half breeds, 15 per cent negroes, and 8 per 
cent pure Indians. 

The possibilities for developing trade with Brazil are un- 
limited. The country is being developed rapidly. Her for- 
eign trade is flourishing. The total imports in 1917 were 
valued at $222,550,000 and the exports at $299,375,000. 

Brazil's commerce is principally carried on with the United 
States, Great Britain, France, Argentina, Portugal and Italy. 

Brazil's natural resources are vast. Her forest regions 
along the Amazon cover 2,000,000 square miles, and it sup- 
plies several hundred miles in the country with timber. 

Brazil's mineral wealth is rapidly being developed. In her 
chief mining regions diamonds, gold, iron, manganese, and 
coal are produced in substantial quantity. Manganese in par- 
ticular, in recent years has been mined with considerable suc- 
cess. It is estimated that the visible deposits of iron total 
2,000,000,000 tons. 

Agriculture, however, is the principal source of wealth. 
Brazil supplies 50 per cent of the world's demand for rubber 
which is found in abundance in the Upper Amazon. The 
total annual crop amounts to more than forty thousand tons. 
Coffee is the chief product ; 4,500,000 acres are devoted to its 
culture. The annual crop is about 12,000,000 sacks. Cacao 
is also an important product. Other crops grown in Brazil 
successfully are sugar, tobacco, cotton, rice, corn, beans 
and mate. 



378 EXPORTING TO THE WORLD 

Census figures for 1916 showing that Brazil had in that 
year nearly 29,000,000 head of cattle, over 17,000,000 swine, 
7,000,000 sheep, and 6,000,000 horses, reflect the wealth of the 
country in the stock raising industry. 

The textile industry is the most important manufacturing 
industry. Capital invested is about $80,000,000. There is 
considerable development going on in the preparation and 
manufacture of hides and leather. About 20,000,000 pairs of 
shoes are made annually. 

The foreign commerce of Brazil is shown in the following 
figures of imports and exports for a period of nine years : 

Year. Imports. Experts. 

1910 $231,292,000 $304,370,000 

1911 257,163,000 325,272,000 

1912 307,934,000 362,795,000 

1913 326,100,000 313,628,000 

1914 172,223,000 221,539,000 

1915 . . . 146,082,000 255,659,000 

1916 195,998,000 265,802,000 

1917 209,434,000 284,114,000 

1918 247,352,000 284,275,000 

The principal cities of Brazil are Rio de Janiero, Sao Paulo, 
and Bahia. 

Paraguay 

With the exception of Uruguay, Paraguay is the smallest 
of the South American republics, having a total area of 
171,815 square miles. Yet it is larger in area than the state 
of Arizona and Alabama combined. While it is the most 
backward country in South America, it has, nevertheless, 
wonderful possibilities for development. At present 
tobacco, cotton, and mate are grown extensively. Stock 
raising is growing in importance. Paraguay's commerce is 
improving. Its principal exports are hides, quebracho extract, 
mate, hardwoods, and tobacco. 

The principal city is Asuncion. 

The population of Paraguay is about 800,000. 

The following table shows the extent of its foreign trade: 



THE WORLD'S MARKETS 379 

Year. Imports. Exports. 

1910 $6,217,000 $4,769,000 

1911 6,494,000 5,593,000 

1912 5,190,000 4,109,000 

1913 7,876,000 5,462,000 

1914 4,995,000 4,447,000 

1915 2,334,000 8,624,000 

1916 4,492,000 4,667,000 

1917 4,667,000 11,237,000 

Uruguay 

Uraguay is the smallest republic in South America, contain- 
ing only 72,210 square miles. The country is about the size 
of North Dakota. It enjoys a mild and healthful climate 
which attracts thousands of people annually. Its population 
according to the latest census, was 1,378,000, or a population 
of about 19.1 persons per square mile. Italians, Spaniards, 
Brazilians, Argentinos, French, Swiss, English, and Germans 
predominate. There are very few Americans in the country. 
Montevideo with a population of 376,000 is the largest city, 
and the capital. 

Cattle raising is a very important industry in Uruguay. 
American interests have established packing plants in the 
country and this has given considerable encouragement to 
the raising of cattle. Uruguay's vast grazing territory also 
is an advantage in the development of this industry. Sheep 
raising is also important. There are about 25,000,000 sheep 
in the country. 

The government is lending considerable assistance to the 
agricultural interests. Agricultural colleges with experimental 
stations similar to those conducted in the United States have 
been established. The principal crops are wheat, oats, lin- 
seed, and barley. 

Uruguay's foreign commerce is gradually growing. The 
country serves as a good market for coal, foodstuffs, machin- 
ery, office appliances, etc. The following table on her foreign 
commerce indicates the country's growing importance: 

Year. Imports. Expiprts. 

1910 $46,590,000 $44,200,000 

1911 51,355,000 50,753,000 

1912 50,666,000 65,142,000 



380 EXPORTING TO THE WORLD 

Year. Imports. Exports. 

1913 50,501,000 69,201,000 

1914 37,379,000 59,102,000 

1915 35,000,000 73,300,000 

1916 35,155,000 71,050,000 

1917 38,700,000 96,217,000 

The Near East 

Owing to changed conditions in Europe there has been 
some confusion as to geographical boundaries in that conti- 
nent. Nations have been dismembered ; new states have been 
created and boundary lines have been redrawn. It is there- 
fore necessary to make a study of the modern geography of 
Europe in order that the reader may get his bearings. 

The Near East, also known as the Levant, has perhaps 
suffered as many changes at the hands of the map makers 
as any other region in the old world as the result of the Great 
War. According to the Department of Commerce the Near 
East is understood to mean the Balkan States, Turkey in 
Asia, and Egypt, as well as Arabia and Persia, and parts of 
Armenia. 

The Balkans include the following states: 

Roumania, Bulgaria, Servia, a part of Croatia-Slavonia, Bos- 
nia and Herzegovina, Dalmatia, Montenegro, Albania, Greece, 
and the remnants of European Turkey. 

The Balkan Peninsula includes all the above named regions 
with the exception of Roumania. 

Since the end of the war, and the subsequent opening of 
these countries to foreign commerce great markets for Ameri- 
can wares have been revealed. The majority of these regions 
need foodstuffs, cloth, clothing, electrical plants and mate- 
rials, farming products, agricultural machinery and imple- 
ments, motor transportation, railway material and rolling 
stock, and bridge construction materials. Countries like 
Greece, Roumania and Turkey have been large purchasers of 
American goods in the past, and latest reports from that 
region are very encouraging. As soon as conditions are set- 
tled in the new states the United States may rest assured of a 
substantial share of the trade from that part of the world. 



THE WORLD'S MARKETS 381 

The Far East 

The Far East includes Japan, Chosen, Formosa ; the Philip- 
pine Islands; China, Manchuria, Mongolia, Tibet, Hong 
Kong; Siberia; French Indo-China; Siam; the Malay Penin- 
sula ; India, Burma, Ceylon, Afghanistan and Baluchistan ; 
and the Dutch East Indies, including Java, Sumatra, Celebes, 
Borneo, and New Guinea. 

America's business with the Far East has been making 
rapid strides. Our total sales for 1914 were $113,425,616 while 
in 1913 they were increased to $458,937,775. Japan is one of our 
best customers in that region. With the betterment of trans- 
portation facilities the Far East should develop into one of 
America's finest markets. 

In 1918 we exported goods to Japan valued at nearly $274,- 
000,000 while our imports were over $300,000,000. 

Our exports to China in 1918 were over $52,000,000 while 
our imports were nearly $111,000,000. 

A great potential market for American wares lies in India, 
containing a population of over 300,000,000 people. Tariff 
duties present no obstacle to any country. India needs cot- 
ton piece goods, automobiles, electrical apparatus, and hard- 
ware in general, grains, rugs, dyes, typewriters, oils, tools, 
explosives, glassware, etc. 

Ceylon is a good market for cotton goods, automobiles, ker- 
osine, haberdashery, leather goods, sewing machines, type- 
writers, hardware and textiles. 

Colombo is the principal city and ranks seventh in tonnage 
among all ports. 

A comparative table of foreign trade statistics showing the 
commerce of the United States with principal regions of the 
Far East gives an idea of the importance of those markets. 
The following tables disclose the magnitude of trade with 
the Far East for a period of years.* 



Japan 





Exports. 


Imports. 


1913 


$61,204,180 


$92,236,691 


1914 


48,385,538 


98,269,504 


1916 


101,733,000 


169126,000 


1917 


186,340,304 


253,669,709 


1918 


273,819,586 


301,919,771 



382 



EXPORTING TO THE WORLD 



Exports. Imports. 

Philippine Islands, 1913 $25,384,793 $21,010,248 

1914 27,304,275 18,162,312 

1916 22,862,673 35,648,133 

1917 38,140,152 62,384,641 

1918 52,976,172 85,935,220 
China 1913 21,326,834 39,010,800 

1914 24,698,734 39,382,978 

1916 25,131,459 71,655,045 

1917 40,292,059 125,106,020 

1918 52,570,579 110,970,969 
British India 1913 15,108,956 116,220,591 

1914 15,625,195 111,903,527 

1916 22,537,000 68,609,000 

1917 36,000,000 101,057,067 
Straits Settlements 1913 3,606,901 35,712,185 

1914 4,184,674 26,307,860 

1916 4,585,231 82,114,598 

1917 7,734,439 127,562,633 
Dutch East Indies 1913 3,151,693 6,221,954 

1914 3,676,895 5,334,361 

1916 7,401,026 27,716,589 

1917 21,139,305 62,011,236 
Siam 1913 485,058 116,565 

1914 836,870 146,545 

1916 774,956 237,250 

1917 1,051,586 149,162 

The Commonwealth 
of Australia 

Lying to the southeast of the continent of Asia is the Com- 
monwealth of Australia, comprising the states of New South 
Wales, Queensland, South Australia, Victoria, Western Aus- 
tralia, and two territories, the northern territory and certain 
possessions in the South Sea Islands. The total area of 
Australia proper is 2,946,691 square miles; of the "Common- 
wealth" 2,974,581 square miles. 

Australia is rich in a variety of industries. Not only is it 
a great sheep and cattle country but it produces minerals 
such as gold, coal, silver, copper and iron, in great quantities. 
As a manufacturing country Australia is developing rapidly 



THE WORLD'S MARKETS 3S3 

owing to the liberal policy of the Commonwealth government 
to encourage local industries by means of protected duties 
and the payment of bounties. New South Wales and Victoria 
are the leading manufacturing states. 

The following table of imports and exports indicate the im- 
portance of the Commonwealth's foreign commerce : 

Year. Imp'orts. Experts. 

1910 $280,027,000 $347,576,000 

1911 312,4:70,000 370,864,000 

1912 364,688,000 369,062,000 

1913 372,112,000 366,616,000 

1914 185,602,000 176,982,000 

1915 300,639,000 282,725,000 

1916 361,713,000 348,916,000 

1917 355,683,000 457,060,000 

1918 283,796,000 350,114,000 

New Zealand is 1,200 miles southeast of Australia. The 
total area is 104,751 square miles. It consists of two long, 
narrow main islands separated by Cook Strait. The popu- 
lation is about 1,000,000, 98 per cent of which are of British 
birth. The principal cities of New Zealand are Auckland, 
Wellington, Christ Church, and Bunedin. New Zealand as 
a market for American wares is a fertile one. Its foreign 
trade is reflected in the following figures : 

Year. Imports. Experts. 

1910 $75,179,000 $93,590,000 

1911 92,871,000 106,649,000 

1912 94,993,000 90,280,000 

1913 101,946,000 103,384,000 

1914 108,321,000 110,728,000 

1915 105,221,000 126,286,000 

1916 104,608,000 150,845,000 

1917 128,180,000 161,991,000 

1918 101,804,000 153,769,000 

Africa as a Market 
for American Goods 

Africa is little known to the average American trader. We 
have paid but little attention to this part of the world. We speak, 
of course, of the South African Union with a great white pop- 



384 EXPORTING TO THE WORLD 

ulation. The Transvaal with its rich mines furnishes the wealth 
of that region and upon these riches depends the prosperity of 
the Union. 

While the population of this section of Africa is growing 
slowly nevertheless it has splendid prospects and American man- 
ufacturers and exporters are making creditable gains in the 
establishment of a permanent trade with the merchants of that 
region. 

The area of the Union of South Africa is 473,100 square miles 
which figures illustrate the immensity of the country. It is nearly 
as large as Alaska. Its population is over 7,000,000. 

Other countries in Africa such as Morocco, Algeria, Tunis and 
Tripoli have not yet reached that commercial position where they 
demand serious attention for big business. 

During the years 1917 and 1918 the exports of the United 
States to Africa which in this instance includes Egypt and 
other colonies of European countries were valued at $51,383,- 
656 and $59,199,319, respectively. The exports to the Union 
of South Africa in 1917 totaled $39,084,607 as compared with 
$43,760,697 in 1918. 

While we have included Egypt in the division called the 
Near East it may be proper to give passing notice to that 
country in speaking about Africa owing to the fact that next 
to the Union of South Africa it is the most important coun- 
try in that continent from the standpoint of its potential pos- 
sibilities for American wares. Egypt has several trade cen- 
ters in which business can be developed. There are no exact- 
ing trade laws to hinder commerce as the country is under 
British control. 

Europe 

Europe has been America's greatest customer. Although 
composed of great manufacturing nations, Europe before the 
war bought tremendous quantities of American-made goods, as 
statistics furnished by the Bureau of Foreign and Domestic 
Commerce indicate. The records of manufactured articles sold 
to Europe for 12 years is as follows: 1900, $145,000,000; 1901, 
$135,000,000 ; 1902, $130,000,000 ; 1904, $137,000,000 ; 1905, $135,- 
000,000; 1906, $151,000,000; 1907, $165,000,000; 1908, $173,000,- 
000; 1909, $160,000,000; 1910, $168',000,000 ; 1911, $186,000,000; 
1912, $206,000,000. 
x Before the war we sold to Germany manufactured articles that 



THE WORLD'S MARKETS 385 

she could manufacture cheaper in her own factories. England 
has been a great buyer of American manufactured articles. Some 
of the purchases by some of the countries of Europe of certain 
manufactured articles such as sewing machines, watches, etc., 
have been greater than the purchases of all the countries of 
South America put together. France, the country in which 
the automobile originated, purchased more automobiles from 
the United States before the war than our neighbor, Mexico. 
Other nations will become big buyers as their needs in this 
reconstruction period justify — and their needs are great. 

It is needless to gK> into detail as to the market require- 
ment of each individual country in Europe. It is enough to 
say that practically every nation in that continent is a poten- 
tial field for increased business with the United States. The 
following table of exports and imports with the principal 
countries of Europe reflects the importance of that field: 

Imports from— 

Principal Countries. 1918. 1917. 

Austria-Hungary 97,323 64,937 

Belgium 13,964 158,022 

France 59,509,742 98,639,653 

Germany 317,706 159,352 

Italy 24,340,022 36,480,807 

Netherlands 8,824,419 22,744,504 

Norway 2,015,851 6,280,233 

Russia in Europe 6,784,603 12,350,179 

Spain 18,488,289 36,881,630 

Sweden 5,935,490 18,069,487 

Switzerland 16,882,854 19,834,668 

United Kingdom 148,614,815 280,080,175 

Exports to— 

Principal Countries. 1918. 1917. 

Austria-Hungary 

Belgium 154,649,338 56,080,886 

Denmark 11,353,845 32,408,830 

France 931,199,774 940,791,331 

Germany 3,275 



386 EXPORTING TO THE WORLD 

Principal Countries. 1918. 1917. 

Greece 4,346,471 8,636,163 

Italy 492,145,797 419,034,486 

Netherlands 11,369,269 57,540,570 

Norway 36,137,464 62,847,557 

Russia in Europe 8,902,449 315,250,020 

Spain 69,188,733 91,584,080 

Sweden 15,674,108 20,467,923 

United Kingdom 2,061,300,680 2,008,669,641 

Canada 

We regard Canada as a domestic rather than as a 
foreign field. Canada is growing in importance as a mar- 
ket for American goods. Her trade practices are similar to 
ours and there is no difficulty in establishing relations with 
the business men of the Dominion. We sold goods to the 
value of over $800,000,000 in 1917 to Canada. In 1918 the 
total value was $886,000,000. 



CHAPTER XXIII 
FOREIGN TRADEMARK REQUIREMENTS 

American manufacturers who have seriously committed them- 
selves to the policy of developing business for their products in 
foreign countries on a permanent basis, should not neglect the 
matter of registering their trademarks in the markets where such 
procedure may be deemed justifiable. Unless this precaution is 
taken, many of our exporting manufacturers will someday wake 
up to the fact that before they are able to do business in certain 
foreign countries they must dicker for the privilege with certain 
persons in those countries commonly known as "trademark 
pirates" who, taking advantage of the thoughtlessness of our 
American business men, registered these valuable trademarks 
in their own name. 

In order to protect himself from these "pirates" the first thing 
an American manufacturer should do before beginning busi- 
ness in a foreign country is to register his trademark. This 
should be done even before appointing an agent or a repre- 
sentative, for the very simple reason that agents or repre- 
sentatives are sometimes known to register trademarks in 
their own names, and thereby deprive the American principal 
of his property rights. Neither should our American manu- 
facturer depend on foreign agencies to handle this trademark 
matter. They, also, are sometimes known to register trade- 
marks in their own name. The safest plan is to fiind a solicitor 
of patents and trademarks in the United States — there are 
many of these officials in this country, who have facilities for 
registering trademarks in foreign countries through reliable 
and competent associates. 1 

1 Since it is not feasible in any Latin American country, any more than it is in 
the United States, for any one not a trained specialist to attempt to secure his 
own patent or registered trade mark, any publication attempting to give directions 
as to the methods of securing patents and trade-marks would serve no adequate 
purpose and would be, in a great majority of cases, misleading in the highest degree. 
No manufacturer in the United States would for an instant consider a proposition 
of securing a patent or trade-mark except through regular patent and trade-mark 
solicitors. The identical procedure is necessary in Latin America. 

If the owner of an United States trade-mark (already registered in the United 
States Patent Office) wishes to secure protection under the laws of the Latin 
American countries, this trade-mark must be filed in the proper office of the 
country wherein registration is desired. The registration offices of the several 
countries are called by different names. In order to register the U. S. or any other 

387 



388 EXPORTING TO THE WORLD 

Dangers Resulting 
From This Neglect 

The dangers resulting from the failure to register trade- 
marks in foreign countries where an American manufacturer 
may have a potential market for his goods may be seen from a 
recent exposure of a wholesale effort on the part of a Portu- 
guese to corner a large number of trademarks belonging to 
American manufacturers in European countries and South 
America. By taking advantage of international trademark 
and patent laws, and riling a few papers in Portugal at the 
cost of a few hundred dollars this Portuguese is said to have 
obtained control of the principal markets of continental Eur- 
ope and South America for American automobiles and tract- 
ors. Registering these trademarks in his own name in Portu- 
gal this man was within his rights under the Berne Trademark 
Convention to extend the control of these trademarks to the 
twelve other countries parties to the convention, unless the 
American owner had previously obtained registration in those 
countries. 

In the countries where this man obtained tihe trademarks he' is 
the only man entitled to sell these cars or tractors. He has the 
legal right to have confiscated in his favor all cars bearing those 
trademarks which are shipped to those countries. This places 
him in a position where he can force the manufacturers of these 
cars to make him their agent on his own terms or to stop doing 
business there. It cost this man only $20 to procure the registra- 
tion of each trademark at Berne after he obtained registration 

foreign trade-mark, it is usual for a power of attorney for that purpose, (certified 
by the consular representative of the country where it is desired to register the 
trade-mark), to be sent to some person residing in the city where the registration 
office is situated. A certified copy of the trade-mark as issued by the United States 
Patent Office, vised by the consul, must also be sent. In addition, it is advisable 
to send at least a dozen copies of the trade-mark, the ordinary printed copies used 
by the Patent Office being sufficient. An application for the registering of the 
trade-mark is then made out in Spanish (Portuguese if in Brazil, French if in 
Haiti) signed by the person holding the power of attorney, and filed in the regis- 
tration office, together with the power of attorney, the certified copy of the trade- 
mark, and some of the plain copies with certified translation into Spanish. In due 
course of time the Office will issue a certificate certifying the registering of the 
trade-mark in that office. The foreign trade-mark is given the same protection and 
enjoys the same advantages as the trade-mark of the country. 

Filing a trade-mark grants exclusive right to use of the same, and both criminal 
and civil proceedings may be instituted against a person infringing that right. 

Each country of Latin America has special laws and regulations concerning the 
registering of trade-marks. In general, however, they correspond to those above. 

In law it is not necessary that the filing of the application be done by a lawyer 
as any one has a right to apply for a registration of a trade-mark, but in practice 
a patent and trade-mark solicitor is always employed and this practice is strongly 
recommended. The names of suitable persons can be obtained from the United 
States Consuls in each country. There are also firms in the larger cities of the 
United States who make a specialty of this.— Statement issued by the Pan-American 
Union. 



FOREIGN TRADEMARK REQUIREMENTS 380 

in Portugal. By reason of the fact that the United States is not a 
party to the Berne Convention, it is necessary for manufactur- 
ers to procure registration separately in each country in which 
they wish to do business. 

In speaking of the dangers of trademark piracy in foreign 
countries, Mr. Albert E. Parker, New York patent lawyer, who 
discovered the plot just mentioned made the following state- 
ment: 

"The most sinister and difficult problem which American ex- 
porters are constantly having to face is the policy, which has so 
enormously increased in recent years, of the pirating by for- 
eigners of well-known American trademarks. American manufac- 
turers, while unacquainted with the system under which trade- 
marks are protected abroad, due to the fair and equitable ar- 
rangement common in the United States, whereby a trade- 
mark becomes the property of a manufacturer by actual use 
upon the goods themselves, are so frequently meeting with 
handicaps in the development of their trade abroad that it 
becomes important to keep before the American exporter the 
exact situation in connection with the protection of his trade- 
marks and commerce in foreign countries. 

"In practically all Latin countries, the registration of trade- 
marks is the only way in which an American trader can 
acquire property rights in his brand or trademark 
and it is the common experience of those who are handling 
the goods of American manufacturers in foreign markets 
to find that the trade in a certain country is barred by reason 
of the unauthorized registration of the manufacturer's trade- 
mark by what are commonly classed as trade-mark pirates. 

"Latin-American lawyers and commercial firms resent the 
suggestion that the practice of registering American trade- 
marks in the name of a native of the country is rightly de- 
scribed as an act of commercial piracy, as in many cases the 
Latin agent, knowing full well the laxity of American manu- 
facturers in such matters, frequently files an application to 
register the trademark in his own name, avowedly for the pro- 
tection of the trade which he hopes and. expects to build up 
under that brand or trademark. 

"Unfortunately, many such registrations, while at the outset 
effected in good faith, are used by the agent abroad for 
securing better terms from the American manufacturer in case 



390 EXPORTING TO THE WORLD 

of a dispute between the parties, and in many instances the 
agent refuses to assign the registration when the manufacturer 
or export house, through the development of its business or 
from other conditions, desires to change its agency relations 
abroad. 

"The situation in Brazil is extremely difficult for the Ameri- 
can manufacturers in that while it allows American traders to 
register their marks at the Junta Commercial in Rio, such a 
registration does not prevent a Brazilian trader from himself 
registering the same trademark in the separate states, twenty 
in number, forming the Republic of Brazil, and a mark so regis- 
tered by the Brazilian trader can be used on the. same or similar 
goods for which the American owner of the mark has obtained 
registration, and this without any possibility of redress. 

"The situation in the Argentine Republic has been acute in 
these matters for many years past and without exaggeration 
it can be stated that many hundreds of well-known American 
trademarks have been wrongfully registered in the Argen- 
tine and large sums have been paid to Argentine citizens 
for the recovery of the right to use trade marks so registered. 
One of the leading export houses in New York recently re- 
ported that it had paid large sums to two Argentine traders 
for the right to export the goods of one of its clients to that 
country. 

"Government departments and consular representatives abroad 
are constantly urging on American traders the need for taking 
the simple and safe course, which in the end is also the econo- 
mical course, of registering their trademarks abroad before 
actually beginning trading operations in foreign countries. The 
small outlay involved in so registering, seeing that a registra- 
tion> once effected, extends for a period of from ten to fifteen 
years or more, is trivial compared with the amount which 
might be, and frequently is demanded for the assignment of 
rights in a single, country by a pirate who has registered the 
American trademark. 

"A step forward has been taken through the passage of a new 
trademark measure in Great Britain which provides that any 
trademark which has been actually used in trading operations 
in Great Britain for a period of two years may be registered 
by the user thereof, and this, no matter what may be the nature 
of the mark. Thus, geographical terms, surnames, and even 



FOREIGN TRADEMARK REQUIREMENTS 391 

descriptive words, if bona fide used as trademarks by the 
manufacturer for a period of two years may be registered. 

'This will entitle British manufacturers to extend their regis- 
trations abroad in those countries where a certified copy of the 
home registration is demanded, and some legislation of this 
character is sorely needed in the United States, to enable Ameri- 
can manufacturers to obtain similar advantages abroad. Many 
well-known American trademarks are debarred registration 
at the United States Patent Office under the present trade- 
mark law by reason of the nature of the trademarks, but 
they could readily be registered and protected under the laws of 
the foreign countries ; and foreign trademark pirates, knowing 
the disadvantage in which American manufacturers are placed 
by the above situation, are constantly registering such trade- 
marks in their own names, to the serious detriment of the 
American trader and with the express object of obtaining sub- 
stantial payments from the rightful owner of the trademarks 
in this country." 

Trademark regulations 
Vary in all countries 

The American manufacturer takes little trouble in endeavor- 
ing to obtain information regarding the registration of his trade- 
mark in foreign countries. To him, a little matter like register- 
ing his mark overseas is of little consequence. Perhaps, he isn't 
thinking about venturing into foreign countries to sell his wares. 
Why, then, should he take the trouble of protecting the mark for 
which he has probably spent thousands of dollars to develop and 
to advertise at home? It is because he is not interested. In 
spite of all that has been said and written about the necessity 
of registering trademarks in overseas markets, the American 
manufacturer has been negligent, and the foreign trade pirate 
has been profiting as the result of this negligence. The matter of 
registering trademarks is not as complicated as it might seem. 
It is possible to obtain ample protection in practically every 
country where it is desirable to develop a market, if the manu- 
facturer will only take the trouble to do it. 

The countries of the world in which trademarks may be regis- 
tered may be divided into two groups — the common-law 
group and the code-law group, 



392 EXPORTING TO THE WORLD 

The common-law group comprises those countries in which 
ownership of trademarks is based on the common-law property 
right in trademarks; that is, a trademark is protected under 
the common law whether or not the mark has been registered. 
In this group may be included such nations as Great Britain, 
the colonies, and the United States, etc. 

The code-law group comprises those countries where property 
rights in trademarks are acquired under statutes alone, and 
only upon complying with the provisions of the statute. 
Under this code are embraced most European or Latin Ameri- 
can countries. 

Requirements in 
Code-in-law Countries 

In the code-law countries trademark registration is necessary 
in order to acquire the exclusive rights to its use in those 
countries. If the owner of the trademark does not take the 
trouble to register it any other person may do so, and acquire 
the exclusive right to use it notwithstanding the fact that the 
real owner may have used the mark for many years. 

The theory of the trademark in these code-law countries is 
somewhat different than in the United States where a person 
must make use of it before making a registration. In the code- 
law countries, however, the theory is reversed. Registration 

Under the trade-mark law of the Republic of Czechoslovakia, enacted on July 
24, 1919, trade-marks which had been registered with any chamber of commerce 
in the former Austro-Hungarian empire, to ....^ day of enactment of the new law 
will be protected in the territory of the Republic with the priority of the original 
application if the owner of the trade-mark notifies the proper chamber of commerce 
in the Republic that he wishes to avail himself of the trade-mark protection in the 
jurisdiction of the Czechoslovak State. Three copies of the trade-mark, the identity 
of which should be certified by the chamber of commerce which originally registered 
it, should be attached to the application and applicants whose trade-marks were 
registered with any chamber of commerce in former Austria-Hungary, outside of 
the territory of the Czechoslovak Republic, should additionally attach a certified 
abstract from the trade-mark register. The expired period will be deducted from 
the 10 years' period of protection. 

Trade-marks of aliens which had been registered only with the Vienna Chamber 
of Commerce or only with the Budapest Chamber of Commerce will be protected at 
their request within the entire jurisdiction of the Czechoslovak Republic with the 
original priority. 

But in the territory where hitherto they have not been in effect they will be 
subject to the rights of third parties. Trade-marks with the picture or a name of 
the President of the Republic or other persons who have been of great service to 
the State and are generally well known, seals, devices, mottos, and coats of arms 
of States and municipalities or medals, can be registered only if on the basis of 
present regulations the right to use these special marks has first been established. 

A person who has not a fixed residence in the territory of the Czechoslovak 
Republic can file an application if the laws of his home State extend the same 
privileges to the subjects of Czechoslovakia, provided also he appoints a duly 
authorized representative in the Czechoslovak Republic. The period of protection 
is 10 years. To September 18, 1919, 1,720 of new trade-marks and of those already 
registered in former Austria-Hungary had been presented for recording in the central 
trade-mark register; 56 of these because of noncompliance with the laws relating 
to trade-marks had been rejected and 122 had been temporarily withheld. 



FOREIGN TRADEMARK REQUIREMENTS 393 

must first be made, after which the person making the registra- 
tion has full legal authority to use it for his own purposes. 
Ignorance of this point has been the chief source of trouble for 
American manufacturers who have taken the step to register 
their marks in foreign countries a moment too late. 

How the Trademark 
Pirate operates 

Trademark pirates have received considerable encouragement 
to ply their trade through the ignorance of American manu- 
facturers with respect to the procedure necessary to obtain pro- 
tection in foreign countries. This ignorance has cost many 
American manufacturers large sums of money, for the trade- 
mark pirate in the real sense of the word is an unscrupulous 
being. Blackmail is not beneath his dignity. Sometimes a 
milder method is taken as for instance where a trademark is 
pirated merely to obtain a better bargain in negotiating for 
an exclusive agency. 

Cases are also known where agents in foreign countries in 
order to insure for themselves a permanent contract as repre- 
sentatives of manufacturers, register the trademark of their 
principals. The latter in order to protect his interests per- 
mits the agent to continue as his representative under the 
circumstances. He can do nothing else. He cannot change 
his agency. 

Marks capable of 
Registration 

The following general observations apply to the kind of marks 
that are possible of registration in foreign countries: 

No mark that is impossible of distinguishing the goods 
of one person from the goods of another can be registered. 

No person can register a mark which every person should 
have the right to use in carrying on his business. 

There are certain types of marks favored in the United 
States which cannot be registered in many countries, and for 
this reason it is important that conditions in foreign coun- 
tries be considered. 

On substantially the same basis patterns, designs, drawings, and representations, 
showing forms, shapes, and the outward appearance of specimens and models of 
goods and manufactures are protected under the law of July 24, 1919, which confirms 
otherwise the provisions of the old Austrian law relating to the subject. In this 
case, however, two samples of the article or its picture along with a certificate of 
its identity shall be presented with the application. Protection is granted for one, 
two, or at most three years. — Trade Commissioner Vlademer A. Geringer. 



394 EXPORTING TO THE WORLD 

A name should not be used; any other person with the same 
name may have the right to use it. 

Initials cannot be registered in Great Britain nor in the 
Colonies; they should not be used* 

The use of an invented word in connection with a patented 
article is objectionable because it becomes common property 
after the patent runs out. 

Designs are very much in favor. 

An invented word is discouraged because if the article be- 
comes known by that name all rights in the trademark are lost. 

Generally speaking, all marks possible of being registered in 
the United States can be registered abroad, with certain ex- 
ceptions. 

In many countries an American concern cannot register its 
trade-mark unless the mark is already registered in the United 
States. The most important of these countries in which this 
rule prevails are Germany, Austria, Russia, Spain, Sweden, 
Guatemala, Honduras, Cuba and Uruguay. 

In countries like Great Britain and Colonies, Germany, Hol- 
land, Sweden, Peru, and Uruguay opposition may be made to 
the registration of a trade-mark by others, as in the United 
States. 

The Chinese memory is a long one; it does not forget a trade-mark and the 
degree of satisfaction it has stood for. In this connection it may be well to mention 
the importance of trade-marks in general. The newcomer will find strongly in- 
trenched trade-marks rather difficult to supplant. The Chinese purchaser will choose 
an article with a familiar trade-mark rather than take a chance with a new article 
that might seem superior to a foreign buyer. And while this may add to the 
difficulty of entering the market, it also offers a means of security in retaining 
trade once established. The Chinese purchaser buys almost exclusively by the 
brand. For example, he will often ask for the "fox" brand of chisel, paying 
slightly more for it than for some cheaper, newer, less-known, but perhaps better 
tool. In this connection, the manufacturer is urged to have his trade-mark registered 
in both Peking and Tokyo before putting forth his goods, as the pirating of trade- 
marks is common and priority of use does not avail against priority of registration ; 
at least priority of both gives security in case legal accion is necessary. 

The -American manufacturer, however, irrespective of whether he does his 
business through an agency or by direct sales, should take steps to have his trade- 
mark, covering the goods that he hopes to market in China, properly registered so 
as to guard against imitations on the part of unscrupulous manufacturers and dealers. 
As previously stated, the Chinese merchant lays great stress on the trade-mark or 
"chop," and once an article under a certain "chop" has found favor with him he 
will continue to purchase articles of that "chop" without asking any questions. 
About 20 years ago an American firm introduced its heating stoves into the markets 
of North China. This firm made no effort whatever to protect its trade-mark, so that 
today tens of thousands of native-manufactured stoves, bearing the American trade- 
mark, are sold in China. Ten years ago an American manufacturer of underwear 
had extensive sales for his wares throughout the length and breadth of the country; 
today 90 per cent of the goods bearing his trade-mark are imitations. 

It is not only necessary to safeguard against imitation in China of products 
seeking a market there, but registration in Japan is also highly advisable. The 
registration of trade-marks in Japan may be made through a resident representative 
of the applicant, furnished with a power of attorney. The representative is some- 
times a commercial house, sometimes a trade-mark attorney, who makes application 
in behalf of the applicant abroad and, upon receipt of the registration, is empowered 
to represent the applicant in a legal process for the protection of the mark. The 
customary fee is 50 yen ($25). — Miscellaneous Series No. 50, Bureau of Foreign 
and Domestic Commerce. 



FOREIGN TRADEMARK REQUIREMENTS 395 

Importance of 
Registration 

''The apparent increase in the number of unauthorized ap- 
plications for the registration of American trademarks abroad 
calls for an emphatic reminder of the necessity of early regis- 
tration of valuable trademarks, especially in those countries 
where the ownership of marks is based upon registration," 
says Commerce Reports for June 1, 1918. 

"The countries of Latin America have furnished a particularly 
profitable field for the registration of trademarks for speculative 
purposes, as most of those countries grant the exclusive right to 
use a mark to the first applicant without regard to its prior use 
by another. Nearly every issue of the official bulletins of some 
Latin American countries contain applications for trademark 
registration that are evidently fraudulent or at least unauthor- 
ized. The names of automobiles, motor trucks, pharmaceutical 
preparations, and other articles, the sale of which depends largely 
upon advertising and good will have been particularly subject to 
misappropriation, and recently a single firm applied for the 
registration of the trademarks of six among the best-known 
American cars. If registration had been granted, it would have 
been practically equivalent to the acquisition of an exclusive 
agency for the importation of each of these six cars in one of 
the most important foreign markets for automobiles unless the 
manufacturers were willing to adopt a new trademark for that 
particular market. 

"In another case the designation 'Ford American products' 
was sought to be registered in a South American country for 
all classes of goods. The effect of this registration would prob- 
ably have been to give to the local registrant absolute control 
over the use of the word 'Ford' on all goods sold in that 
country. This latter case is illustrative of the difficulties that 
may arise when a trademark used in the United States by vari- 
ous manufacturers for different classes of goods is registered 
abroad in such a way as to cover several of these classes. 
Even if the mark is registered in good faith by one entitled to 
its use, the form of registration may nevertheless prevent the 
use of the mark on a distinct kind of goods by another manu- 
facture except with the consent of the prior registrant. 

"A somewhat different but none the less embarrassing situa- 
tion may be presented when a mark is registered in the name 



396 EXPORTING TO THE WORLD 

of the local agent of the American manufacturer or exporter. As 
long as the exclusive agency continues there are usually no 
difficulties, but should the principal desire to make a change in 
the agency arrangements he may find that the agent has it in 
his power to prevent the importation of the trademarked goods 
except when consigned to him or under such terms as he 
dictates. 

"The only safe course to follow is to register trademarks 
promptly in the name of the manufacturer in countries where 
any considerable business is carried on or anticipated. Even if 
exportation at the present time is limited by war condi- 
tions the registration of the mark abroad may well be re- 
garded as one of the fundamental steps of preparation for 
trade after the w r ar. It is, perhaps, of even greater import- 
ance now than under normal conditions, in view of the 
reported activity of enemy agents and others in appropriating 
American trade marks. The expense of registration usually 
represents only a reasonable outlay for the protection of 
good will, and it is suggested that any article which is worth 
advertising abroad is worth protecting by means of trade- 
mark registration. 

"Steps are now being taken toward the immediate establish- 
ment of the International Bureau for Trade-Mark Registration 
at Habana. On March 14, 1918, the President of Cuba trans- 
mitted to the National Congress a message reviewing the action 
taken and requesting the appropriation of $10,000 as the con- 
tribution of the Cuban Government toward the initial expenses 
of the bureau. The expenses are to be borne by the various 
governments in the same proportion as that established by the 
Pan-American Union at Washington. When the necessary 
arrangements have been completed the payment of a single fee 
of $50 will sceure registration for a trademark in all of the 
countries represented in the Bureau, including Costa Rica, Cuba, 
Dominican Republic, Guatemala, Honduras, Nicaragua and Pan- 
ama, and such others as may later be added, as well as in the 
countries of South America when the second bureau shall have 
been established at Rio de Janeiro. 

"The Government of the United States has since made an 
appropriation of $56,380 toward the expenses of operation, and 



FOREIGN TRADEMARK REQUIREMENTS 397 

the new bureau is reported to be accepting- applications for the 
international registration of American trademarks. Appli- 
cations should be sent to the United States Patent Office at 
Washington." 



CHAPTER XXIV 
PUBLICITY IN FOREIGN COUNTRIES 

American industry should have a publicity agent in for- 
eign countries. 

The functions of this publicity agent should be to dissemi- 
nate American intelligence in every foreign country in the 
world. He should keep the foreign world in close touch with 
the progress and development of this country. He should 
be prepared to combat the evil propaganda our trade rivals 
are sure to spread wherever American business interferes 
with their interests. 

The necessity of publicity in foreign countries was fully 
demonstrated during America's participation in the World 
War. When the vicious German propaganda began to spread 
to all countries of the globe, attacking America's motives in 
entering the struggle, it became evident in this country that 
this campaign of untruth had to be stopped. The government 
at once organized a foreign publicity service that reached 
every corner of the globe where people could read and under- 
stand — and the result of this campaign was most gratifying. 
When the war came to an end this publicity service was 
dropped, and American interests engaged in foreign trade 
abroad instantly recognized the necessity of keeping up in one 
form or another a publicity program that would place us in 
the true light in regard to our motives and aims in connection 
with foreign matters. Efforts have been made from time to 
time to revive the work that the government had dropped at 
the conclusion of the war but it seems that they have been 
made in vain. 

American Press Associations 
Now Active in Foreign Field 

A redeeming feature of the situation, however, lies in the 
extension of the service of the great American press associa- 

398 



PUBLICITY IN FOREIGN COUNTRIES 399 

tions to foreign countries. These organizations are respon- 
sible for the presentation of more American news in foreign 
newspapers than ever before in their history. Particularly 
in South America, where in the past the greater percentage 
of the news came from Europe before the war, there has been 
a great improvement in the use of American news in the press 
of that continent. Today in the great newspapers of South 
America one may find a reasonable share of the space devoted 
to American cable dispatches sent out by the American press 
associations. Before the entrance of the American concerns 
in the southern field, whatever little American news did creep 
into the South American newspapers came by way of Europe, 
and as a consequence much of it was richly colored. 

The American press associations, however, cannot be ex- 
pected to carry on a publicity campaign for American inter- 
ests abroad. Their chief function is to distribute news, and 
the moment they deviate from this function their efficiency in 
this detail is likely to suffer. Nor must any organization or 
set of organizations that may be inclined to take up this 
tremendous task attempt to compete with these press asso- 
ciations. Instead, their work should supplement the efforts 
of these quasi-public concerns without encroaching upon their 
basic functions. 

There is no question that there is a field for this sort of 
work in foreign countries where so often misunderstandings 
arise concerning the motives of the American people in their 
activities in connection with international affairs. These mis- 
understandings are partly due to misinformation, partly due 
to inaccuracy of statements, and partly due to vicious propa- 
ganda on the part of our enemies. This situation had much 
to do with the organization of the government's publicity 
work abroad during the war. It was essential in this case 
to fully explain our aims and ideals in connection with the 
war in order that the foreign people, who had in a measure 
succumbed to the perverted German propaganda, could under- 
stand our true position in the great struggle. 

With peace at hand and competition among nations inten- 
sified more than ever in their struggle for commercial 
supremacy, it is more than certain that there will be a re- 
currence of this propaganda against the United States in 
some form or another, and this country must be prepared 



400 EXPORTING TO THE WORLD 

to meet it. As a matter of fact immediately after the war 
attacks upon America had already begun. An instance in 
point may be given to illustrate the ruthlessness with which 
our competitors have already begun to fight American inter- 
ests: The Webb-Pomerene law was apparently enacted to 
permit manufacturers to combine for export trade for the 
purpose of economizing in overhead expenses, and expediting 
the sale of goods abroad. However, the aims of our manu- 
facturers and exporters were questioned in certain sections of 
South America when a partial text of the law had been re- 
ceived there Our competitors spread reports to the effect 
that the Webb law was purely a device by American capital- 
ists to monopolize foreign markets, and to tighten their grip 
on foreign customers to such a degree that they could sell 
at their own prices. Without entering into the merits of the 
Webb Act, it is apparent that those who are opposed to 
American advances in foreign fields, are willing to grab any 
straw within reach to use as a basis for attacking our mo- 
tives. It is doubtful if these attacks were ever answered. 

Instances such as this are occurring in all parts of the world 
right along. American travelers returning home after months 
on the road in foreign countries have related similar instances 
in which American interests have been the subject of vicious 
attacks. 

Publicity Machine 
Should Be Organized 

It seems that, in view of these underhand methods of 
combatting American competition, our manufacturers and ex- 
porters who are most vitally interested in the establishment 
of our good will and confidence in foreign countries where 
we are desirous of building up trade, and where these un- 
friendly activities are manifest, should take the initiative in 
organizing a gigantic publicity machine along the lines fol- 
lowed by the defunct Committee on Public Information of 
the United States Government for the purposes of dissemin- 
ating information in foreign lands. This machine or bureau 
should be established in the principal American port, and 
should have cable connections with all the principal markets 
of the world. It should be in charge of competent and intelli- 



PUBLICITY IN FOREIGN COUNTRIES 401 

gent newspaper men who understand how to prepare and to 
distribute news matter. There should be representatives in 
foreign countries to receive these cables or any other mate- 
rial that may be sent from the home office, and to see that 
intelligent distribution to the press of the country in which 
they are located, is effected. 

Not only should the publicity bureau confine its activities 
to the despatching of cable stories to foreign countries but 
it should also conduct a mail service composed of material 
intelligently collected in this country for the use of the press 
abroad. There is a wealth of material in this country of tre- 
mendous value for this kind of publicity work that the for- 
eign' newspapers, generally speaking, would be only too glad 
to use, if someone would mail it to them. 

The publicity bureau should also perform the functions of 
an information bureau. It should keep foreign countries in 
close touch with legislation directly or indirectly connected 
with international trade. It should see to it that where there 
is some doubt as to the interpretation of certain American ac- 
tivities, a full explanation is given out to the foreign press 
without delay. 

Articles describing our various industries, showing how 
American products are made; articles explaining the advan- 
tages of highways, safety-first devices, systems of sanitation, 
central heating plants, modern plumbing, etc. — all these are 
of vital interest to people living in foreign countries and 
whose standard of comfort is not as high as that which we 1 
enjoy in this country. 

Supplementing this cable and mail service the motion pic- 
ture could be brought into play. In fact, a publicity cam- 
paign would not be complete without the motion picture. As 
a device to interpret American enterprise, and to visualize the 
immensity of our industrial machine the motion picture is un- 
equalled. It tells the story better than the words of any 
writer. Already, individual American industries are turning 
to the motion picture to demonstrate their products abroad 
with most gratifying results. With the number of motion 
picture theaters growing in all parts of the world the use of 
the "movies" for publicity work is practical. 

A publicity bureau of this sort, using the printed word and 
the motion picture for the dissemination of information 



403 EXPORTING TO TH(E WORLD 

abroad would be of inestimable value to American interests. 
It would seem that such worthy organizations as the Foreign 
Trade Council or the American Manufacturers Export Asso- 
ciation, or some other competent organization closely con- 
nected with foreign commerce should take the lead to plan 
some form of organization to handle American publicity 
abroad in the interests of American business along some 
such lines as have been suggested in this chapter. 
The results would be worth the effort. 



APPENDIX 



UNITED STATES EXPORTS, BY GRAND DIVISIONS 



Fiscal 
Year 

1870... 

1871... 

1872... 

1873... 

1874... 

1875... 

1876... 

1877... 

1878... 

1879... 

1880... 

1881... 

1882... 

1883... 

1884... 

1885... 

1886... 

1887... 

1888... 

1889... 

1890... 

1891... 

1892... 

1893... 

1894... 

1895... 

1896... 

1897... 

1898... 

1899... 

1900... 

1901... 

1902... 

1903... 

1904... 

1905... 

1906... 

1907... 

1908... 

1909... 

1910... 

1911... 

1912... 

1913... 

1914... 

1915... 

1916... 

1917... 

1918... 



Europe No. America 

$420,184,014 $68,962,006 



479,738,693 
450,167,843 
539,061,323 
572,511,479 
533,544,921 
538,322,835 
557,244,615 
, 597,774,959 
, 594,189,272 
, 719,433,788 
766,113,798 
, 600,100,498 
, 659,867,396 
583,795,462 
, 599,240,748 
, 541,373,039 
575,300,326 
, 549,092,503 
, 578,902,520 
, 683,736,397 
. 704,798,047 
. 850,623,150 
. 661,976,910 
. 700,870,822 
. 627,927,692 
. 673,043,753 
. 813,385,644 
. 973,806,245 
. 936,602,093 
.1,040,167,763 
.1,136,504,605 
,1,008,033,981 
.1,029,256,657 
.1,057,930,131 
.1,020,972,641 
.1,200,166,036 
.1,298,452,380 
.1,283,600,155 
.1,146,755,321 
.1,135,914,551 
.1,308,275,778 
.1,341,732,789 
.1,479,074,761 
.1,486,498,729 
.1,971,434,687 
.2,999,305,097 
.4,324,512,661 
.3,738,231,162 



77,348,184 

73,230,648 

81,629,759 

94,942,138 

86,166,454 

79,926,699 

83,058,656 

78,762,184 

67,598,525 

69,437,783 

83,156,899 

85,793,255 

99,428,476 

92,217,190 

76,764,748 

71,980,400 

73,425,948 

79,995,497 

89,550,476 

94,100,410 

96,549,129 

105,566,184 

119,788,889 

119,693,212 

108,575,594 

116,567,496 

124,958,461 

139,627,841 

157,931,707 

187,594,625 

196,534,460 

203,971,080 

215,482,769 

234,909,959 

260,570,235 

308,382,982 

349,840,641 

324,674,719 

309,476,694 

385.520,069 

457,950,179 

516,837,597 

617,413,013 

528,644,962 

477,075,727 

733,024,674 

1,163,758,100 

1,237,720,614 



Exports to~ 

So. America 

$21,651,459 

19,599,581 

27,006,890 

29,661,967 

26,747,020 

24,096,950 

22,862,746 

22,577,154 

24,690,478 

23,437,376 

23,190,220 

25,304,846 

27,224,850 

29,570,659 

31,226,934 

27,734,857 

26,131,991 

30,744,497 

29,579,227 

35,021,017 

38,752,648 

33,708,290 

33,147,614 

32,639,077 

33,212,310 

33,525,935 

36,297,671 

33,768,646 

33,821,701 

35,659,902 

38,945,763 

44,400,195 

38,043,617 

41,137,872 

50,755,027 

56,894,131 

75,159,781 

82,157,174 

83,583,874 

76,561,680 

93,246,820 

108,894,894 

132,310,451 

146,147,993 

124,539,909 

99,323,957 

180,175,374 

259,480,371 

314,564,482 



Asia 

$10,972,064 

7,781,138 

13,965,166 

18,727,094 

15,087,695 

13,972,305 

15,528,567 

27,149,945 

28,998,343 

11,752,969 

11,645,703 

12,917,348 

18,393,671 

16,348,742 

16,913,978 

20,739,972 

21,980,999 

19,322,172 

18,929,152 

18,439,626 

19,696,820 

25,553,308 

19,590,350 

16,222,354 

20,872,761 

17,325,057 

25,630,029 

39,274,905 

44,707,791 

48,360,161 

64,913,807 

49,390,712 

63,944,077 

58,359,016 

60,151,347 

128,504,610 

105,451,610 

92,703,664 

101,784,832 

71,792,187 

60,861,813 

85,422,428 

117,461,635 

115,056,620 

113,425,616 

114,470,493 

278,610,881 

380,249,708 

447,456,515 



Oceania 

$4,334,991 

3,307,841 

3,613,780 

4,677,457 

4,493,916 

4,276,305 

4,771,212 

7,345,929 

8,607,644 

9,900,550 

6,846,698 

9,506,577 

12,460,664 

13,571,721 

13,105,604 

13,605,468 

14,777,407 

13,867,552 

14,746,065 

16,239,403 

16,460,269 

18,621,801 

15,572,767 

11,199,477 

11,914,182 

13,109,231 

17,197,229 

22,652,773 

22,003,022 

29,875,015 

43,391,275 

35,392,401 

34,258,041 

37,468,512 

32,850,681 

33,079,446 

35,141,751 

41,186,193 

46,789,201 

41,389,788 

50,890,087 

66,060,813 

71,936,513 

79,102,845 

83,568,417 

77,764,725 

98,775,828 

109 314,490 

134,889,500 



Africa 

$3,414,768 

3,203,113 

4,005,140 

3,524,474 

3,037,144 

3,470,782 

4,814,382 

4,271,788 

4,770,729 

4,758,701 

5,084,466 

5,377,878 

6,569,319 

5,052,480 

3,254,441 

4,103,962 

3,280,994 

3,552,716 

3,612,063 

4,248,333 

5,082,140 

5,250,235 

5,778,083 

5,838,487 

5,577,285 

7,074,656 

13,870,760 

16,953,127 

17,515,730 

18,594,424 

19,469,849 

25,542,618 

33,468,605 

38,436,863 

24,230,126 

18,540,603 

19,562,340 

16,511,026 

20,340,565 

17,035,434 

18,551,380 

23,607,107 

24,043,424 

29,088,917 

27,901,515 

28,519,751 

43,591,031 

52,733,064 

55,423,368 



403 



APPENDIX 



UNITED STATES AND LATIN AMERICAN COMMERCE 



Imports into the United States Exports from the United States 








Pet. from 






Pet. to 


Fiscal 


Total From Latin 


Latin 


Total 


To Latin 


Latin 


Year 




America 


America 




America America 


1893 . 


$866,400,922 


$225,906,702 


26.08 


$847,665,194 


$88,503,514 


10.44 


1894 . 


654,994,622 


218,362,321 


33.34 


892,140,572 


78,924,298 


8.85 


1895 . 


731,969,965 


196,516,050 


26.85 


807,538,165 


74,422,739 


9.22 


1896 . 


779,724,674 


180,022,806 


23.09 


882,606,938 


76,611,305 


8.68 


1897 . 


764,730,412 


156,661,864 


20.49 


1,050,993,556 


78,320,416 


7.45 


1898 . 


616,049,654 


136,854,235 


22.21 


1,231,482,330 


74,030,291 


6.01 


1899 . 


697,148,489 


148,150,097 


21.25 


1,227,023,302 


88,307,187 


7.20 


1900 . 


849,941,184 


167,180,295 


19.67 


1,394,483,082 


110,674,490 


7.94 


1901 . 


823,172,165 


198,233,744 


24.08 


1,487,764,991 


118,772,158 


7.98 


1902 . 


903,320,948 


208,510,497 


23.08 


1,381,719,401 


115,132,413 


8.33 


1903 . 


1,025,719,237 


225,923,096 


22 . 03 


1,420,141,679 


115,053,595 


8.10 


1904 . 


991,087,371 


256,227,244 


25.85 


1,460,827,271 


136,615,381 


9.35 


1905 . 


1,117,513,071 


302,266,593 


27.05 


1,518,561,666 


159„156,657 


20.48 


1906 . 


1,226,562,446 


294,049,326 


23.97 


1,743,864,500 


209,043,359 


11.99 


1907 . 


1,434,421,425 


334,572,126 


23.33 


1,880,851,078 


229,966,603 


12.23 


1908 . 


1,194,341,792 


273,176,971 


22.87 


1,860,773,346 


219,968,513 


11.82 


1909 . 


1,311,929,224 


324,154,136 


24.71 


1,663,012,204 


201,912,874 


12.14 


1910 . 


1,556,947,430 


392,955,257 


25.24 


1,744,984,720 


242,123,502 


13.87 


1911 . 


1,527,226,105 


371,300,234 


24.31 


2,049,320,199 


273,525,344 


13.35 


1912 , 


1,653,264,934 


423,037,208 


25.59 


2,204,322,409 


196,141,651 


13.43 


1913 . 


, 1,813,008,234 


442,419,973 


24.40 


2,465,884,149 


323,775,885 


13.13 


1914 , 


, 1,893,925,657 


469,082,667 


24.77 


2,364,579,148 


282,070,153 


11.93 


1915 . 


1,674,169,740 


557,413,053 


33.29 


2,768,589,340 


251,469,431 


9.08 


1916 . 


, 2,197,883,510 


760,132,729 


34.58 


4,333,482,885 


411,193,859 


9.40 


1917 , 


. 2,659,355,185 


962,860,611 


36.21 


6,290,048,394 


581,954,695 


9.25 


1918 


. 2,946,059,403 


985,160,871 


33.44 


5,928,285,641 


725,820,970 


12.24 



Includes Mexico, Central America, South America, and the West 
Indies, with exception of British, Danish, Dutch, and French. 

Imports of United States from and exports of United States to the 
separate Latin American countries in year ended June 30, 1918, were; 
Imports from — Costa Rica, $7,615,482; Guatemala, $7,822,960; Honduras, 
$5,437,809; Nicaragua, $4,590,037; Panama, $7,845,390; Salvador, $6,870,432; 
Mexico, $140,801,097; Cuba, $264,024,006; Dominica, $8,061,412; Haiti, $4,815,- 
544; Argentina, $195,633,348; Bolivia, $122,917,000; Brazil, $113,511,954; Chile, 
$141,075,704; Colombia, $25,975,988; Ecuador, $10,887,968; Paraguay, $69,797; 
Peru, ,$41,439,218; Uruguay, $23,530,682; Venezuela, $13,287,738. 

Exports from United States to Costa Rica, $1,903,224; Guatemala, 
$6,292,760; Honduras, $4,618,729; Nicaragua, $4,377,688; Panama, $23,638,116; 
Salvador, $3,479,332; Mexico, $106,893,653; Cuba, $235,682,045; Dominica, 
$16,011,019; Hayti, $8,359,922; Argentina, $109,444,001; Bolivia, $3,581,396 
Brazil, $66,270,046; Chile, $63,529,124; Colombia, $10,992,199; Ecuador 
84,830,468; Paraguay, $672,454; Peru, $22,011,583; Uruguay, $18,061,880; Vene- 
zuela, $7,823,007. 



404 



APPENDIX 



PRINCIPAL PORTS OF THE WORLD 



Country and Port 



Yr. 



EUROPE 

Unit. Kingdom: London 1916 

Liverpool >. . 1916 

Hull 1916 

Manchester 1916 

Glasgow 1916 

Southampton 1916 

Cardiff 1916 

Belfast 1916 

Germany: Hamburg 1913 

Bremen 1913 

Belgium : Antwerp 1912 

France: Marseilles 1913 

Havre 1913 

Dunkirk 1913 

Bordeaux 1913 

Italy: Genoa 1915 

Naples 1915 

Turkey: Constantinople 1912 

Aust.-Hungary: Trieste 1913 

Fiume 1912 

Russia: Petrograd 1915 

Riga 1915 

Odessa 1915 

Vindau 1914 

Libau 1914 

Novorossisk 1914 

Nikolaiev 1914 

Batum 1914 

"Vladivostok 1914 

Spain: Barcelona 1913 

Valencia 1913 

Bilbao 1913 

OCEANIA 

Australia: Sydney 1916 

Melbourne 1916 

AMERICA 

Unit. States: New York 1917 

Galveston 1917 

New Orleans 1917 

Massachusetts 1917 

Philadelphia 1917 

Maryland 1917 

San Francisco 1917 

Washington 1917 

Virginia 1917 

Buffalo 1917 

Michigan 1917 

St. Lawrence 1917 

Canada: Montreal 1917 

Mexico: Vera Cruz 1913 

Tampico . 1913 

Cuba: Havana 1916 

Argentina: Buenos Aires .... 1916 



rtment of 


Commerce. 


.000 omitted.) 
Total 


Imports 


Exports 


Commerce 


Dollars 


Dollars 


Dollars 


1,748,933 


917,060 


2,665,993 


1,362,735 


954,624 


2,317,359 


263,547 


158,702 


422,249 


233,435 


107,950 


341,385 


164,508 


204,759 


369,267 


58,824 


23,102 


81,926 


43,991 


65,711 


109,702 


47,990 


1,996 


49,986 


1,084,325 


817,275 


1,901,600 


370,608 


211,421 


582,029 


623,164 


588,181 


1,211,345 


389,639 


365,733 


755,372 


357,924 


258,795 


616,719 


187,538 


36,201 


223,739 


89,163 


78,606 


167,769 


387,600 


120,934 


508,534 


90,945 


31,768 


122,713 


74,360 


28,600 


102,960 


175,997 


161,430 


337,428 


43,833 


53,923 


97,756 


14,675 


16,841 


31,416 


463 


103 


566 


721 


51 


772 


4,061 


27,852 


31,913 


15,703 


10,590 


26,293 


9,573 


35,858 


45,431 


873 


18,442 


19,315 


4,469 


14,593 


19,062 


26,481 


1,752 


28,233 


79,428 


29,839 


109,267 


14,342 


19,162 


33,504 


22,272 


9,929 


32,201 


157,050 


193,676 


350,726 


129,430 


67,034 


196,464 


Dollars 


Dollars 


Dollars 


1,338,199 


3,053,120 


4,391,319 


8,505 


266,279 


274,784 


104,517 


303,510 


408,027 


217,905 


225,578 


443,483 


109,486 


464,471 


573,957 


43,973 


374,033 


418,006 


144,027 


142,890 


286,917 


198,321 


177,650 


375,971 


19,330 


137,012 


156,342 


67,715 


217,120 


284,835 


41,749 


290,376 


332,125 


98,660 


103,939 


202,599 


222,119 


384,314 


606,432 


40,733 


42,118 


82,851 


22,825 


40,379 


32,204 


183,154 


89,006 


272,159 


176,982 


263,186 


440,168 



405 



APPENDIX 



PRINCIPAL PORTS OF THE WORLD (continued) 

(Compiled by the United States Department of Commerce. .000 omitted) 



Country and Port 



Yr. Imports 



EUROPE 

Brazil: Santos 1916 

Rio de Janeiro 1916 

Chile: Valparaiso 1915 

Antofagasta 1915 

Peru: Callao 1916 

Uruguay: Montevideo 1911 

ASIA 

China: Shanghai 1916 

Canton 1916 

Tientsin 1916 

Japan: Yokohama 1916 

Kobe 1916 

Osaka 1916 

Brit. Colonies: Singapore 1916 

Calcutta 1916 

Bombay 1916 

AFRICA 

Egypt: Alexandria ,, 1916 



Total 
Exports Commerce 



Dollars 


Dollars 


Dollars 


52,093 


118,229 


170,322 


86,597 


47,604 


134,201 


26,306 


11,929 


38,235 


8,539 


22,057 


30,596 


29,277 


32,305 


61,581 


42,627 


32,167 


74,794 


171,493 


177,209 


348,703 


21,487 


45,620 


67,106 


36,718 


17,702 


54,420 


104,554 


248,080 


352,634 


186,488 


165,056 


351,544 


40,867 


70,690 


111,557 


244,589 


214,600 


459,189 


167,667 


285,859 


453,525 


143,422 


143,846 


187,268 



106,109 



178,086 



284,195 



TEMPERATURE AND RAINFALL OF FOREIGN CITIES 



Mean Annual 
Annual Aver- 



City or Place 



Tem- 
pera- 
ture 



Alexandria 69.0 

Amsterdam 49.9 

Archangel 33.0 

Athens 63.0 

Bagdad 71.6 

Berlin 48.2 

Bermuda 72.0 

Berne 46.0 

Bombay 77.7 

Brussels 50.0 

Buenos Aires 62.8 

Calcutta 79.5 

Cape Town 62.0 

Cherrapongee 

Christiania 41.5 

Constantinople 57.7 

Copenhagen 45.3 

Delhi 77.0 

Dublin 50.1 

Edinburgh 47.1 

Geneva 52.7 

Glasgow 49.8 

Havana 76.6 

Honolulu 73.9 

Jerusalem 60.6 



age 
Rain- 
fall 
inches 
8 
26 
16 
16 
9 
23 
55 
46 
75 
29 
34 
65 
25 
458 
23 
29 
22 
28 
28 
26 
82 
44 
52 
39 
25 



City or Place 



Mean Annual 

Annual Aver- 

Tem 



pera- 
ture 



Lima 66.7 

Lisbon 60.1 

London 50.8 

Madrid 56.1 

Melbourne 57.0 

Mexico 59.7 

Montevideo 62.0 

Montreal 41.9 

Munich 48.4 

Nice 58.0 

Manila 80.1 

Paris 50.0 

Peking 53.0 

Petrograd 39.6 

Quebec 40.3 

Rio de Janeiro 72.7 

Rome 60.5 

Stockholm 42.3 

The Hague 52.0 

Tokio 56.4 

Valparaiso 57.7 

Venice 55.4 

Vera Cruz 77.0 

Vienna 48.6 



age 
Rain- 
fall 
inches 
2 
29 
25 
9 
29 
23 
44 
41 
35 
29 
76 
22 
25 
17 
40 
43 
30 
17 
26 
58 
20 
26 
180 
25 



406 



APPENDIX 

TABLE FOR CONVERSION OF POUNDS AVOIRDUPOIS 

INTO KILOGRAMS 

To find the weight in kilos of a shipment of merchandise weighing 
say, 10,471 lbs., find the number of pounds in the column marked "lbs." 
The equivalent number of kilos is in the following column thus: 

Lbs. 10,000 — Kilos 4536.00 
400 — " 181.44 

71 — " 32.206 



Lbs. 10,471 — Kilos 4749.646 

To find the weight in kilos of Lbs. 100,000, take the kilo equivalent 
of Lbs. 10,000, i. e., Kilos 4536.00, and move the decimal point one figure 
to the right, thus: Lbs. 100,000.— Kilos 45,360.00. 



bs. 


equal 


Kilos 


Lbs. 


equal 


Kilos 


1 


«« 


0.4536 


48 


«« 


21.773 


2 


<< 


0.9072 


49 


ft 


22.226 


3 


« 


1.3608 


50 


tt 


22.680 


4 


« 


1.8144 


51 


tt 


23.134 


5 


44 


2.2680 


52 


it 


23.587 


6 


44 


2.7216 


53 


n 


24.041 


7 


44 


3.1752 


54 


<< 


24.494 


8 


44 


3.6288 


55 


<• 


24.948 


9 


it 


4.0824 


56 


■i 


25.402 


10 


44 


4.5360 


57 


«i 


25.855 


11 


44 


4.990 


58 


a 


26.309 


12 


« 


5.443 


59 


a 


26.762 


13 


41 


5.897 


60 


" 


27.216 


14 


44 


6.350 


61 


n 


27.670 


15 


44 


6.804 


62 


<« 


28.123 


16 


44 


7.258 


63 


■■ 


28.577 


17 


44 


7.711 


64 


■1 


29.030 


18 


" 


8.165 


65 


44 


29.484 


19 


44 


8.618 


66 


44 


29.938 


20 


" 


9.072 


67 


44 


30.391 


21 


44 


9.526 


68 


" 


30.845 


22 


44 


9.979 


69 


44 


31.298 


23 


44 


10.433 


70 


44 


31.752 


24 


44 


10.886 


71 


44 


32.206 


25 


44 


11.340 


72 


44 


. . . « 32.659 


26 


44 


11.794 


73 


" 


33.113 


27 


<< 


12.247 


74 


44 


33.566 


28 


44 


12.701 


75 


44 


34.020 


29 


It 


13.154 


76 


" 


34.474 


30 


" 


13.608 


77 


" 


34.927 


31 


" 


14.062 


78 


" 


35.381 


32 


" 


14.515 


79 


" 


35.834 


33 


" 


14.969 


80 


" 


36.288 


34 


It 


15.422 


81 


44 


36.742 


35 


" 


15.876 


82 


44 


37.195 


36 


it 


16.330 


83 


44 


37.649 


37 


it 


16.783 


84 


44 


38.102 


38 


" 


17.237 


85 


" 


38.556 


39 


it 


17.690 


86 


44 


39.010 


40 


It 


18.144 


87 


44 


39.463 


41 


tl 


18.598 


88 


44 


39.917 


42 


it 


19.051 


89 


44 


40.370 


43 


it 


19.505 


90 


" 


40.824 


44 


ft 


19.958 


91 


44 


41.278 


45 


" 


20.412 


92 


" 


41.731 


46 


it 


20.886 


93 


M 


42.185 


47 


tt 


21.319 


94 


fl 


42.638 



407 



APPENDIX 

TABLE FOR CONVERSION OF POUND AVOIRDUPOIS 
INTO KILOGRAMS (Continued) 



Lbs. equal 


Kilos 


Lbs. equal 


Kilos 


95 


43.092 


8000 


. . . 3628.80 


96 " 


43.546 


9000 


. . . 4082.40 


97 " 


43.999 


10000 


... 4536.00 


98 " 


44.453 


11000 


. . . 4990.00 


99 " 


44.906 


12000 


. . . 5443.00 


100 


45.36 


13000 


. . . 5897.00 


200 


90.72 


14000 


. . . 6350.00 


300 


136.08 


15000 


. . . 6804.00 


400 


181.44 


16000 


. . . 7258.00 


500 


226.80 


17000 


. . . 7711.00 


600 


272.16 


18000 


. . . 8165.00 


700 " 


317.52 


19000 


. . . 8618.00 


800 " 


362.88 


20000 


. . . 9072.00 


900 


408.24 


25000 


... 11340.00 


1000 


453.60 


30000 


13608.00 


2000 


907.20 


40000 


. . . 18144.00 


3000 


1360.80 


50000 


22680.00 


4000 


1814.40 


60000 


27216.00 


5000 


. 2268.00 


70000 


31752.00 


6000 


. 2721.60 


80000 


36288.00 


7000 " 


, 3175.20 


90000 u 


. , . . 40824.00 



408 



APPENDIX 



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411 



APPENDIX 



PANAMA CANAL TRAFFIC 



Tear 




—Atlantic 


: to Pacific 




— Pacific 


to Atlantic 


(Fis- 


Ves- 


Cargo 


Net 


Cargo 


Ves- 


Gross 


Net 


Cargo 


cal) 


sels 


Tons 


Tons 


Tons 


sels 


Tons 


Tons 


Tons 


1915 .. 


530 


2,657,865 


1,884,728 


2,125,735 


558 


2,758,922 


1,958,307 


2,844,057 


1916 .. 


411 


1,912,846 


1,308,231 


1,434,236 


376 


1,683,683 


1,171,531 


1,705,810 


1917 .. 


905 


4,170,733 


2,925,414 


3,076,843 


971 


4,360,088 


3,083,944 


4,152,412 


3018 .. 


921 


3,938,042 


2,750,378 


2,639,466 


1,209 


5,433,297 


3,908,480 


4,922,647 


1919 .. 


921 


3,460,417 


2,678,579 


2,778,065 


1,186 


4,418,186 


3,443,006 


4,029,742 



Total 3,688 16,139,903 11,551,330 12,054,345 4,300 18,654,176 13,565,268 17,654,668 



TOTAL. 




7,988 



Gross Tons 

5,416,787 
3,596,529 
8,530,821 
9,371,339 
7,876,703 

34,794,079 



Net Tons 

3,843,035 
2,479,762 
6,009,358 
6,658,858 
6,131,575 

25,116,598 



Cargo Tons 
4,969,792 
3,140,046 
7,229,255 
7,562,113 
6,807,807 

29,709,013 



DISTANCES FROM PANAMA CANAL TO CHIEF PORTS OF THE 

WORLD 

Distance to nearest Canal terminal by usual routes, in nautical 
miles, from following ports (length of Canal, 34 nautical miles): 



Montreal, Can 3,160 

Halifax, N. S 2,317 

Portland, Me 2,198 

Boston, Mass 2,157 

New York, N. Y 1,974 

Philadelphia, Pa 1,946 

Baltimore, Md 1,901 

Norfolk, Va 1,779 

Wilmington,, N. C 1,730 

Charleston, S. C 1,564 

Savannah, Ga 1,607 

Jacksonville, Fla 1,535 

Key West, Fla 1,065 

Mobile, Ala 1,393 

New Orleans, La 1,403 

Galveston, Tex 1,493 

Tampico, Mexico 1,485 

Tuxpam, Mexico 1,455 

Vera Cruz, Mexico 1,420 

Belize, British Honduras . . 816 

Puerto Barrios, Guatemala 780 

Truxillo, Honduras 622 

Bluefields, Nicaragua 276 

Port Limon, Costa Rica .. 192 

Bocas del Toro, Panama . . 144 

Havana, Cuba 1,003 

Bermuda Islands 1,643 

Kingston, Jamaica 551 

Port au Prince, Haiti 774 

San Juan, Porto Rico ...... 993 

St. Thomas, Virgin Island 1,029 

Barbados, West Indies .... 1,237 

Port of Spain, Trinidad .. 1,159 

Curacao 699 

Cartagena, Colombia 2S1 



La Guayra, Venezuela .... 841 

Georgetown, British Guiana 1,535 

Paramaribo, Dutch Guiana 1,648 

Para, Brazil 2,374 

Pernambuco, Brazil 3,458 

Rio de Janeiro, Brazil .... 4,349 

Buenos Ayres, Argentina. . 5,450 

Ascension Island 4,212 

St. Helena Island 4,878 

Cape Town, Africa 6,574 

Monrovia, Liberia 4,148 

Freetown, Sierra Leone . . . 3,983 

St. Vincent, C. V. 1 3,268 

Funchal, Madeira 3,859 

Fayal, Azores 3,288 

Gibraltar (Strait) 4,343 

Marseilles, France 5,036 

Genoa, Italy 5,203 

Naples, Italy 5,325 

Constantinople, Turkey . . 6,166 

Odessa, Russia 6,509 

Port Said, Egypt 6,268 

Lisbon, Portugal 4,205 

Bordeaux, France 4,598 

Havre France 4,610 

Bishops Rock, Scilly Island 4,356 

Liverpool, England 4,548 

Glasgow, Scotland 4,492 

Plymouth, England 4,455 

London, England 4,763 

Antwerp Belgium 4,808 

Amsterdam, Holland 4,832 

Hamburg, Germany 5,070 

Copenhagen, Denmark .... 5,350 

Christiana, Norway 5.237 



412 



APPENDIX 



PANAMA CANAL TRAFFIC (Continued) 

DISTANCES FROM PANAMA CANAL. TO CHIEF PORTS OF THE 

WORLD 

Distances to nearest Canal terminal by usual routes, in nautical 
miles, from following- ports (length of Canal, 34 nautical miles): 



Stockholm, Sweden 5,897 

Petrograd, Russia 6,282 

Bergen, Norway 5,295 

Archangel, Russia 6,900 

Sitka, Alaska 4,547 

Vancouver, B. C 4,032 

Seattle, Wash 4,021 

Port Townsend, Wash 3,985 

Astoria, Ore 3,775 

Portland, Ore 3,869 

San Francisco, Cal 3,245 

Los Angeles, Cal 2,913 

San Diego, Cal 2,843 

Magdalena Bay, Mexico . . 2,265 

Mazatan, Mexico 2,006 

Acapulco, Mexico 1,426 

Salina Cruz, Mexico 1,170 

San Jose, Guatemala 886 

La Union, Salvador 748 

Amapala, Honduras 745 

Corinto, Nicaragua 683 

Puntarenas, Costa Rica . . 471 

Pedregal, Panama 243 

Buenaventura, Colombia .. 356 

Guayaquil, Ecuador 793 

Callao, Peru 1,346 

Iquique, Chile 1,778 



Antofagasta, Chile 2,140 

Valparaiso, Chile 2,616 

Coronel, Chile 2,822 

Punta Arenas, Chile 3,943 

Cape Horn, Chile 4,260 

Galapagos Islands 864 

Marquesas Islands 3,826 

Christmas Islands 4,752 

Honolulu, Hawaii 4,685 

Midway Islands 5,707 

Yokohama, Japan 7,682 

Vladivostok, Siberia 7,833 

Shanghai, China 8,556 

Hongkong, China 9,195 

Manila P. 1 9,347 

Singapore, S. S 10,505 

Batavia, Java 10,610 

Port Apra, Guam 7,988 

Caroline Islands (Ponape) 7,321 

Marshall Islands 7,041 

Fiji Islands (Levuka) 6,288 

Samoa (Apia) 5,710 

Tahiti, Society Islands .... 4,486 

Sydney, Australia 7,674 

Melbourne, Australia 8,255 

Wellington, New Zealand . 6,505 



413 



APPENDIX 



FOREIGN WEIGHTS AND MEASURES 



Denominations 

Almude 

Ardeb . ., 



Are 

Arobe 

Arratel or libra 
Arroba (dry) . . 



Arroba (liquid) 



Arshine 

Arshine (sq.) 

Artel 

Baril 



Barrel 



Berkovets . . 
Boll, or Bole 
Bongkai 

Bouw 

Bu 

Butt (wine) . 

Cafflso 

Candy 



Cantar 



Cantaro (cantar) 
Carga 



Catty 



Centaro 
Centner 



Chetvert 
Chih .... 

Cho 

Comb . . 
Coyan . , 



Where Used 
Portugal . . , 
Egypt 



Metric 

Paraguay 

Portugal 

Argentine Republic 

Brazil , 

Cuba 

Portugal 

Spain 

Venezuela 

Cuba, Spain and 

Venezuela 

Russia 



Morocco 

Argentine Republic and 

Mexico 

Malta (customs) 

Spain (raisins) 

Russia 

Scotland, Ireland .... 

India 

Sumatra 

Japan . ., 

Spain , 

Malta 

India (Bombay) 

India (Madras) 

Egypt 

Morocco 

Syria (Damascus) .... 

Turkey 

Malta 

Mexico, Salvador ..... 



China 

Japan ,. 

Java, Siam, Malacca 

Sumatra 

Central America . . . 
Bremen, Brunswick 

Darmstadt 

Denmark, Norway . 

Nuremberg 

Prussia 

Sweden 

Vienna 

Zollverein 

Double or metric . . 

Russia 

China 

Japan 

England 

Sarawak 

Siam (Koyon) 



American Equivalents 

4,422 gals. 

7.6907 bu.; and, at Cairo, 
it equals 4.92 Imp. bu., 
or 5.07 Winch'r bu. 

0.02471 acre. 

25 lbs. 

1.011 lbs. 
25.3175 lbs. 
32.38 lbs. 
25.3664 lbs. 
32.38 lbs. 
25.36 lbs. 
25.4024 lbs. 

4,263 gals. 

28 in. 

5.44 sq. ft. 

1.12 lbs. 

20.0787 gals. 

11.4 gals. 
100 lbs. 
361.12 lbs. 

4 Winchr bu. 
832 grains 
7,096.5 sq. meters 
0.1 inch 
140 gals. 
5.4 gals. 
529 lbs. 
500 lbs. 

99.05 lbs. av. 
113 lbs. 

575 lbs. 

124.7036 lbs 

175 lbs. 

300 lbs. 

1.333 J lbs.; at treaty 

ports, 1.33£ lbs. 
1.31 lbs. 
1.35 lbs. 
2.12 lbs. 
4.2631 gals. 
117.5 lbs. 
110.24 lbs. 
110.11 lbs. 

112.43 lbs. 

113.44 lbs. 
93.7 lbs. 
123.5 lbs. 
110.24 lbs. 
220.46 lbs. 
5.7748 bu. 
14 inches 
2.4507 acres 
4 bu. 

3,098 lbs. 
2,667 lbs. 



414 



APPENDIX 



FOREIGN WEIGHTS AND MEASURES (Continued) 



Denominations 
Cuadra 



Cubic meter 

Cwt. (hundredweight) 
Dessiatine 



Drachme 

Fanega (dry) 



Fanega (liquid) 

Feddan 

Frail (raisins) 
Frasco 



Dry 



Frasila . . . 

Fuder 

Fun 

Garnice . . 

Gram 

Hectare . . 
Hectoliter: 

Liquid 

Joch 

Ken 

Kilogram (kilo) 

Kilometer 

Klaf ter 

Koku 

Korree 

Kwamzme 

Last , 



League (land) 

Li 

Libra (lb.) ... 



Where Used 
Argentine Republic 

Paraguay , 

Paraguay (sq.) 

Uruguay 

Metric 

British 

Russia 

Spain , 

Greece 

Central America . . 

Chili 

Cuba 

Mexico 

Morocco 



Uruguay (double) . 
Uruguay (single) . 

Venezuela 

Spain 

Egypt 

Spain 

Argentine Republic 

Mexico 

Zanzibar 

Luxemburg , 

Russia 

Russian Poland 

Metric 

Metric 



Austria Hungary 

Japan 

Metric , 



Russia 

Japan 

Russia 

Japan 

Belgium, Holland ... 

England (dry malt) 

Germany 

Prussia 

Russian Poland 

Scotland, Ireland . . . 

Spain (salt) , 

Paraguay 

China 

Argentine Republic . 

Central America .... 

Chili 

Ouba 

Mexico 

Peru 

Portugal 

Spain 

JUruguay 1 1.0143 

. Venezuela 1 1.0161 



American Equivalents 

4.2 acres 

78.9 yards 

8.077 sq. ft. 

Nearly 2 acres 

35.3 cu. ft. 

112 lbs. 

2,6997 acres 

1.599 bu. 

Half ounce 

1.5745 bu. 

2.575 bu. 

1.599 bu. 

1.54728 bu. 

Strike fanega, 70 lbs.; 

full fanega, 118 lbs. 
7.776 bu. 
3.888 bu. 
1.599 bu. 
16 gals. 
1.03 acres 
50 lbs. 
2.5096 qts. 
2.5 qts. 
35 lbs. 
264.17 gals. 
0.9028 lbs. 
0.88 gal. 
15.432 grains 
2.471 acres 
2,838 bu. 
26,417 gals. 
1.422 acres 
6 feet 
2.2046 lbs. 
0.621376 mile 
216 cu. ft. 
4.9629 Imp. bu. 
3.5 bu. 
8.28 lbs. 
85.134 bu. 
82.52 bu. 

2 metric tons (4.480 lbs.) 
112.29 bu. 
lit bu. 
10 quarters 
4,760 lbs. 
4.633 acres 
2,115 ft. 
1.0127 lbs. 
1.043 lbs. 
1.014 lbs. 
1.0161 lbs. 
1.01465 lbs. 

1.0143 lbs. 
1.011 lbs. 

1.0144 lbs. 
lbs., 
lbs. 



415 



APPENDIX 



FOREIGN WEIGHTS AND MEASURES (Continued) 



Denominations 

Liter 

Livre (lb.) .... 



Load 



Manzana 



Marc . . 
Maund 
Meter . 

Mil 

Mil 

Milla . , 
Mna . . . 
Morgen 
Ocque . 
Oke . ... 



Pic .. 

Picul 



Pie 



Pik 

Pood 

Pund (lb) 
Quarter . . 



Quintal 



Pottle 
<< 

Sack . 



Sagene 

Salm 

Se 

Seer , 

Shaku 

Sho 

Standard (Petrograd) 

Stone 

Suerte 

Sun 

Tael 



Where Used 

Metric 

Greece 

Guiana 

England (timber) 



Costa Rica 

Nicaragua, Salvador .... 

Boliva 

India ,. 

Metric 

Denmark 

Denmark (geographical 
Nicaragua and Honduras 

Greece 

Prussia 

Greece 

Egypt ,. 

Greece 

Hungary 

Turkey 

Hungary and Wallachia 

Egypt 

Borneo and Celebes . . 
China, Japan and 

Sumatra 

Java 

Philippine Island 

Argentine Republic . . 

Spain 

Turkey 

Russia 

Denmark and Sweden 

Great Britain 

London (coal) . ., 

Argentine Republic . . 

Brazil 

Castile, Chili, Mexico 

and Peru 

Greece . 

Newfoundland (fish) 

Paraguay 

Syria 

Metric 

Palestine 

Syria 

England 



Russia 
Malta 
Japan 
India . 
Japan . 



Lumber measure 

British 

Uruguay 

Japan 

Cochin China . . 



American Equivalents 
1.0567 quarts 
1.1 lbs. 
1.0791 lbs. 

Sq. SO cu. ft.; unhewn, 
40 cu. ft.; inch planks, 
600 superficial ft. 
1 5-6 acres 
1.727 acres 
9.507 lb. 
82 2-7 lbs. 
39.37 inches. 
4.68 miles 
.61 miles 
1.1493 miles 
3.3069 lbs. av. 
0.63 acre 
2.84 lb. av. 
2.8052 lbs. 
2.84 lbs. 
3.0817 lbs. 
2.82838 lbs. 

2.5 pints 
21i inches 
135.64 lbs. 

133£ lbs. 

135.1 lbs. 
137.9 lbs 
0.91407 foot 
0.9479 foot 
27.9 inches 
36.112 lbs. 
1.102 lbs. 
8.252 bu. 

36 bu. 
101.42 lbs. 
130.06 lbs 

101.41 lbs. 

123.2 lbs. 
112 lbs. 
100 lbs. 
125 lbs* 
220.46 lbs. 

6 lbs. 
5f lbs. 

4 bu. of flour, it is 480 
lbs. 

7 feet 
490 lbs. 
0.02451 acre 
1 lb. 13 ozs. 
11.9305 inches 

1.6 quarts 
165 cu. ft. 
14 lbs. 

2,700 cuad. (see cuadra) 
1.193 inches 
590.75 grs. (tray) 



416 



APPENDIX 



FOREIGN WEIGHTS AND MEASURES (Continued) 



Denominations 
Tan , 



Tchetvert 



To 

Ton 

Tonde (cereals) 

Toneland 

Tonne 

Tsubo . ., 

Tsun 

Tunna 

Tunnland , 

Vara . . ., 



Vedro . 
Vergees 
Verst . 
Vlocka 
Wey .. 



Where Used 
Japan 



Russia 



Japan , 

Space measure 
Denmark 



France 
Japan . 
China . . 
Sweden 



Argentine Republic 
Central America . . 
Chili and Peru .... 

Cuba 

Curacao 

Mexico 

Paraguay 

Spain 

Venezuela 

Russia , 

Isle of Jersey 

Russia 

Russian Poland . . . 



American Equivalents 

0.25 acres 

5.77 Imper. bu., or 5.95 
Winchester bu. 
2 pecks 
40 cu. ft. 

3.94783 Winchester bu. 
136 acres 
2204.62 lbs. av. 
6 ft. sq. 
1.41 inches 
4.5 bu. 
1.22 acres 
•34.1208 inches 
32.87 inches 
33.367 inches 
33.384 inches 
33.375 inches 

33 inches 

34 inches 
0.914117 yd. 
33.384 inches 
2.707 

71.1 sq. rods 
0.663 mile 
41.98 acres 



Scotland and Ireland ,. quarters 



417 



APPENDIX 



UNITED STATES EXPORTS— DOMESTIC AND FOREIGN 



fiscal 
Year. 

1800.. 
1810.. 
1820.. 
1830.. 
1840.. 
1850.. 
1855.. 
I860.. 
1861.. 
1862.. 
1863.. 
1864.. 
1865.. 
1866.. 
1867.. 
1868.. 
1869.. 
'1870. . 
1871.., 
1872.. 
1873.. 
1874.. 
1875.. 
1876.. 
1877.. 
1878.. 
1879.. 
1880.. 
1881.. 
1882.. 
1883.. 
1884.. 
1885.. 



Domestic. 

31,840,903 
42,366,675 
51,683,640 
58,524,878 
111,660,561 
134,900,233 
192,751,135 
316,242,423 
204,899,616 
179,644,024 
186,003,912 
143,504,027 
136,940,248 
337,518,102 
279,786,809 
269,389,900 
275,166,697 
376,616,473 
428,398,908 
428,487,131 
505,033,439 
569,433,421 
499,284,100 
525,582,247 
589,670,224 
680,709,268 
698,340,790 
823,946,353 
883,925,947 
733,239,732 
804,223,632 
724,964,852 
726,682,946 



Foreign. 

39,130,877 
24,791,295 
18,008,029 
13,145,857 
12,008,371 

9,475,493 
26,158,368 
17,333,634 
14,654,217 
11,026,477 
17,960,535 
15,333,961 
29,089,055 
11,341,420 
14,719,332 
12,562,999 
10,951,000 
16,155,295 

14,421,270 
15,690,455 
17,446,483 
16,489,619 
14,158,611 
14,802,424 
12,804,996 
14,156,498 
12,098,651 
11,692,305 
18,451,399 
17,302,525 
19,615,770 

15,548,757 
15,506,809 



Total. 

70,971,780 
66,757,970 
69,691,669 
71,670,735 
123,668,932 
144,375,726 
218,909,503 
333,576,057 
219,553,833 
190,670,501 
203,964,447 
158,837,988 
166,029,303 
348,859,522 
294,506,141 
281,952,899 
286,117,697 
392,771,768 
442,820,178 
444,177,586 
522,479,922 
586,283,040 
513,442,711 
540,384,671 
602,475,220 
694,865,766 
710,439,441 
835,638,658 
902,377,346 
750,542,257 
823,839,402 
740,513,609 
742,189,755 



Fiscal 

Year. Domestic. 

1886.. 665,964,529 
1887.. .703,022,923 
1888.. 683,862,104 
1889.. 730,282,600 
1890.. 845,293,828 
1891.. 872,270,288 
1892.. 1,015,732,011 
1893.. 831,030,785 
1894.. 869,204,937 
1895.. 793,392,599 
1896.. 863,200,487 
1897.. 1,032,007,603 
1898.. 1,210,291,913 
1899.. 1,203,931,222 
1900.. 1,370,763,571 
1901.. 1,460,462,806 
1902.. 1,355,481,861 
1903.-1,392,231,302 
1904.. 1,435,179,017 
1905.. 1,491,744,641 
1906.. 1,717,953,382 
1907.. 1,853,718,034 
1908.. 1,834,786,357 
1909.. 1,638,355,593 
1910.. 1,710,083,998 
1911.. 2,013,549,025 
1912.. 2,170,319,828 
1913.-2,428,506,358 
1914.. 2,329,684,025 
1915.. 2,716,178,465 
1916.-4,272,177,579 
1917.. 6,227,164,050 
1918.. 5,847,159,678 



Foreign, 

13,560,301 
13,160,288 
12,092,403 
12,118,766 
12,534,856 
12,210,527 
14,546,137 
16,634,409 
22,935,635 
14,145,566 
19,406,451 
18,985,953 
21,190,417 
23,092,080 
23,719,511 
27,302,185 
26,237,540 
27,910,377 
25,648,254 
26,817,025 
25,911,118 
27,133,044 
25,986,989 
24,655,511 
34,900,722 
35,771,174 
34,002,581 
37,377,791 
34,895,123 
52,410,875 
61,305,306 
62,884,344 
81,125,963 



Total. 

679,524,830 

716,183,211 

695,954,507 

742,401,375 

857,828,084 

884,480,810 

1,030,278,148 

847,665,194 

892,140,572 

807,538,165 

882,606,938 

1,050,993,556 

1,231,482,330 

1,227,023,302 

1,394,483,082 

1,487,764,991 

1,381,719,401 

1,420,141,679 

1,460,827,271 

1,518,561,666 

1,743,864,500 

1,880,851,078 

1,860,773,346 

1,663,011,104 

1,744,984,720 

2,049,320,199 

2,204,322,409 

2,465,884,149 

2,364,579,148 

2,768,589,340 

4,333,482,885 

6,290,048,394 

5,928,285,641 



Figures for exports include gold and silver prior to 1830 
Total exports per capita of population — (1800), $13.37; (1810), $9.22; 
(1820), $7.22; (1830), $5.57; (1840), $7 25; (1850), $6.23; (1860), $10.61; (1870). 
$9.77; (1880), $16.43; (1890), $13.43; (1900), $17.76; (1910), $18.28; 
(1916), $14.33; (1917), $54.82. 

The relative percentage of the various kinds of domestic exports in 
the year ended June 30, 1918, was as follows: Crude materials for use in 
manufacturing, 15.35; foodstuffs in crude condition, and food animals, 
6.42; foodstuffs, partly or wholly manufactured, 19.73; manufactures for 
further use in manufacturing, 20.59; manufactures ready for consumption, 
37.47; miscellaneous, 0.44. 



418 



APPENDIX 
THE PURCHASING POPULATION OF VARIOUS COUNTRIES 

The estimates of the urban population in South America, Central 
America, and some of the other important markets tabulated with the 
idea that to the average American manufacturer these figures give a 
better indication of the extent of the purchasing market than any other 
single class of population figures. The figures here given for urban pop- 
ulation are only approximate. They were prepared by Dr. E.. E. Pratt 
for the Department of Foreign and Domestic Commerce. 



Urban Imports 

Total (purchasing) Total from United 

Countries population population imports States 
South America: 

Argentina 8,700,000 2,560,000 $406,805,000 $59,862,099 

Bolivia 2,521,000 214,000 21,358,000 1,900,000 

Brazil M.308,000 2,953,000 326,865,000 51,358,000 

Chile 3,464,000 986,000 120,274,000 20,089,000 

Colombia 5,473,000 545,000 26,987,000 7,630,000 

Ecuador 1,500,000 315,000 11,653,000 2,764,000 

Paraguay 800,000 201,000 8,120,000 488,011 

Peru 5,800,000 331,000 29,631,000 8,542,000 

Uruguay 1,226,000 442,000 50,666,000 6,300,001 

Venezuela 2,756,000 343,000 17,005,000 6,158,000 

Total 56,548,000 8,880,000 1,018,364,000 165,091,000 

Central America: 

Costa Rica 411,000 69,000 8,685,000 4,468,000 

Guatemala 2,119,000 204,000 10,062,000 5,053,000 

Honduras 589,000 107,000 5,133,000 3,464,000 

Nicaragua 690,000 240,000 5,768,000 3,244,000 

Panama 387,000 81,000 9,872,000 5,413,000 

Salvador 1,210,000 198,000 6,167,000 2,490,000 

Total 5,406,000 899,000 45,687,000 24,132,000 

Latin America, other: 

Cuba 2,474,000 1,026,000 133,975,000 71,380,000 

Haiti 2,500,000 165,000 10,935,000 6,499,000 

Mexico 15,446,000 1,693,000 93,020,000 44,510,000 

Dominican Rep. ... 725,000 72,000 9,272,000 5,769,000 

Total 21,145,000 2,956,000 247,202,000 128,158,000 

China , 336,042,000 a7,774,300 427,406,000 25,826,000 

Japan & 52,985,000 8,300,000 363,257,000 60,959,000 

British India 315,133,000 29,748,000 594,521,000 15,544,000 

Australia 5,044,000 2,417,000 388,102,000 46,342,000 

British South Africa . . 5,973,000 c331,000 187,489,000 17,851,000 

Russia 167,920,000 24,157,000 603,463,000 45,026,000 

•Turkey 20,600,000 3,507,000 193,024,000 5,280,000 

New Zealand 1,152,000 425,000 108,466,000 10,259,000 

Egypt 11,287,000 1,540,000 137,738,000 2,596,000 

a Estimated population of 45 treaty ports in 1912. The total foreign 
population of China in 1912 was 145,000. 
b Total population, 1914; purchasing population, 1908. 

c White population in cities. Total population of Europeans, 1,276.000. 

419 



APPENDIX 



LARGEST CITIES OF THE EARTH 

(The figures in parenthesis indicate the date of the census or official 

estimate.) 



Cities Population 

New York (1917) 5,737,492 

London 4,522,964 

Paris, France <;i911) 2,888,000 

Tokio, Japan (1908) 2,186,000 

Chicago, U. S. A. (1910).. 2,185,000 

Berlin, Prussia (1910) 2,071,000 

Vienna, Austria (1910) 2,031,000 

Petrograd, Russia (1910). 1,908,000 

Phila. U. S. A. (1910) 1,550,000 

Moscow, Russia (1909)... 1,481,000 

Canton, China 1,250,000 

Osaka, Japan (1908) 1,227,000 

Rio De Janeiro, Brazil 

(1910) 1,130,000 

Buenos Ayres (1905) 1,026,000 

Calcutta, Indiana (1911). 1,222,000 

Peking, China 1,000,000 

Bombay, India (1911) 980,000 

Hamburg, Ger. (1910) 931,000 

Hankow, China 900,000 

Budapest, Hung. (1910) .. 880,000 

Tientsin, China 850,000 

Birmingham, Eng. (1911) 840,000 
Glasgow, Scotland (1911) 785,000 
Warsaw, Poland (1909) .. 781,000 
Liverpool, Eng. (1911) ... 748,000 

Naples, Italy (1911) 723,000 

Manchester, Eng. (1911) . 716,000 
St. Louis, U. S. A. (1910) 687,000 



Cities Population 

Boston, U. S. A. (1910)... 671,000 

Cairo, Egypt (1907) 654,000 

Montreal, Canada 650,000 

Fuchow, China 650,000 

Sydney, N.S.Wales (1911) 641,000 

Shanghai, China 639,000 

Bangkok, Siam (1909).... 630,000 

Chungking, China 600,000 

Milan, Italy (1911) 599,000 

Madrid, Spain (1910) 598,000 

Munich, Bavaria (1910).. 596,000 

Melbourne, Vic. (1911)... 594,000 

Leipzig, Saxony (1910).. 590,000 

Barcelona, Spain (1910).. 587,000 

Amsterdam, Neth. (1909) 568,000 

Cleveland U. S. A. (1910) 561,000 

Copehnagen, Den. (1911). 559,000 

Baltimore, U.. S. A. (1910) 558,000 

Marseilles, France (1911) 551,000 

Dresden, Saxony (1910).. 548,000 

Rome, Italy, (1911) 539,000 

Pittsburgh, U.S.A. (1910) 534,000 

Lyons, France (1911) .... 524,000 

Madras, India (1911) 520,000 

Cologne, Prussia (1910).. 517,000 

Breslin, Prussia (1910) .. 512,000 

Hyderabad, India (1911).. 500,000 

Suchow, China 500,000 



420 



APPENDIX 



FOREIGN COMMERCE OF THE UNITED STATES 

A GENERAL SUMMARY 



Fiscal Tot. Imports 

Year and Exports 

Dollars 

1800 162,224,548 

1810 152,157,970 

1820 144,141,669 

1830 134,391,691 

1840 221,927,638 

1850 316,885,252 

1855 476,718,211 

1860 687,192,176 

1861 506,864,375 

1862 380,027,178 

1863 447,300,262 

1864 475,285,291 

1865 404,774,883 

1866 783,671,588 

1867 690,267,237 

1868 639,389,339 

1869 703,624,076 

1870 828,730,176 

1871 963,043,862 

1872 1,070,772,663 

1873 1,164,616,132 

1874 1,153,689,382 

1875 1,046,448,147 

1876 1,001,125,861 

1877 1,053,798,346 

1878 1,131,917,298 

1879 1,156,217,216 

1880 1,503,593,404 

1881 1,545,041,974 

1882 1,475,181,831 

1883 1,547,020,316 

1884 1,408,211,302 

1885 1,319,717,084 



Fiscal Tot. Imports 

Year and Exports 

Dollars 

1886 1,314,960,966 

1887 1,408,502,979 

1888 1,419,911,621 

1889 1,487,533,027 

1890 1,647,139,093 

1891 1,729,397,006 

1892 1,857,680,610 

1893 1,714,066,116 

1894 1,547,135,194 

1895 1,539,508,130 

1896 1,662,331,612 

1897 1,815,723,968 

1898 1,847,531,984 

1899 1,924,171,791 

1900 2,244,424,266 

1901 2,310,937,156 

1902 2,285,040,349 

1903 2,445,860,916 

1904 2,451,914,642 

1905 2,636,074,737 

1906 2,970,426,946 

1907 3,315,272,503 

1908 3,055,115,138 

1909 2,974,931,328 

1910 3,301,932,150 

1911 ... 3,576,546,304 

1912 3,857,587,343 

1913 4,278,892,383 

1914 4,258,504,805 

1915 4,442,759,085 

1916 6,531,366,390 

1917 8,949,403,579 

1918 8,874,345,044 



421 



APPENDIX 



CABLE RATES FROM NEW YORK TO WORLD'S PRINCIPAL 

CITIES 



Per Word 

Abyssinia $0.64 

Algeria 32 

Alexandria (Egypt) 50 

Antigua 36 

Argentina 50 

Austria 32 

Barbados 36 

Belgium 25 

Bermuda , 42 

Bolivia , 50 

Brazil 70 to 1.36 

Bulgaria , .35 

Burmah .66 

Callao (Peru) 50 

Cairo (Egypt) 50 

Cape Colony (S. Af.) 86 

Ceylon 66 

Chile 50 

China 1.22 

Cochin, China 99 

Colon 30 

Cyprus 50 

Demerara 36 

Denmark 35 

Ecuador 50 

England 25 

France 25 

Germany 25 

Gibraltar 43 

Greece 36 

Guatemala .49 

Havana 15 

Hayti 80 to $1.30 

Holland 25 

Honolulu 37 

Hungary 32 

Iceland 35 

India 66 

Ireland 25 

Italy 31 

Jamaica 36 

Japan 1.33 

Java 1-00 



Per Word 

Korea (Seoul) 1.33 

Malta ,.. .35 

Martinque 95 

Matanzas 20 

Melbourne, Vic 66 

Natal (So. Africa) 86 

New South Wales 66 

New Zealand 58 

Norway 35 

Orange River Colony 86 

Panama 30 

Paraguay 50 

Penang 94 

Peru 50 

Philippine Islands, Manila... 1.12 

Other offices 1.17 to 1.30 

Porto Rico 50 

Portugal 39 

Queensland 66 

Roumania 46 

Russia (Europe) 43 

Russia (Asia) 43 

Santo Domingo 80 

Scotland 25 

Serbia 34 

Siam 94 

Sicily 31 

Singapore 94 

Spain 38 

St. Thomas , 50 

Sweden 38 

Switzerland 30 

Sydney (N. S. W.) 66 

Tangier 36 

Tasmania 99 

Transvaal 86 

Trinidad 36 

Turkey (Europe) 36 

Turkey (Asia) 45 

Uruguay 50 

Venezuela 1.00 

Vera Cruz $1.75, 10 wds. 

Victoria (Australia) 66 



These rates are subject to change. 



422 



INDEX 



Abroad— Financing: sales, 133; 

Work of selling 140. 
Acceptance — Discounting, 300 ; 

Discounting bank, 288. 
Account — Collection of, 196 ; 

Guaranteeing, 137; Insuring, 

181. 

Address— Legibility of, 67. 

Advertising — American use of, 
74; Amount of, 75; Deleting 
of, 81 ; Experience in, 75 ; Ex- 
tension of, 74; Good judgment 
in foreign, 79; Increased re- 
ceipts for, 79; Importance of , 
18; Knowledge of, 74; Meth- 
ods of foreign, 74; Necessity 
of consumer, 78; Planning, 
75; Policy of, 75; Power of, 
83; Purposes of, 74; Rate for, 
79; Rules in foreign, 83; 
Sharing charges of, 117; Use 
of, 27; Use of street car and 
outdoor, 80. 
Agency, advertising — As ad- 
visor, 77. 
Agency, Selling— Service of, 

113. 

Agency, foreign — Services of, 

94. 
Agencies, credit, 109. 
Agencies, joint selling, 123. 
Agencies, mercantile — Sub- 
scribing to, 168. 
Agent, manufacturer's ex- 
port, 22; As middleman, 21. 
Agent, del credere — Commis- 
sion of, 109. 
Agent, Local Foreign Sales— 
Contract with, 107, 108, HI- 
Agent, foreign freight — 

Duty of, 229. 
Agent, merchant — Functions 

of, 110. 
Agent, manufacturer s — 

Functions of, 97. 
Agent, publicity — Functions 

of, 398. 
Agent, resident — Appointment 

of, 58. 



Agent, sales — Usefulness of, 

107. 
American Audit Bureau of 

Circulation, 76. 
Argentina — Commercial travel- 
ers in, 46; Duties in, 224; 
Registering trade marks in, 
390. 
Associations — Extension of 
American Press, 398; Func- 
tions of American Press, 399; 
Types of export, 141. 
Australia — Commercial travel- 
ers in, 48. 
Banks — Advantages of branch, 
306; Co-operation of, 127; 
Credit extended by, 312; Es- 
tablishing branch, 305; For- 
eign departments in Amer- 
ican, 292; List of foreign 
branches of American, 301 
Methods of German, 126 
Money advanced by, 307 
Services of branch, 310. 
Belgium — Commercial travel- 
lers in, 45 j Duties in, 226. 
Bills of Exchange (see 
drafts) — Accepting, 286; 
Discounting of insurance of, 
182; Payment of, 182. 

Bills of Lading — Clauses in, 
234; Copies of, 247; Date of, 
205; Draft of, 102; Forms 
of, 234; Indorsement of, 234; 
Issuing, 246; Making out, 
285; Negotiability of, 233; 
Provisions in, 264. 

Bolivia — Duties in, 224; Taxes 
on commercial travellers, 46. 

Branches — Establishment of, 
27-58; Executive in charge of, 

98; Location of, 93; Success of, 

113. 

Brazil— Duties in, 224; Mer- 
chants of, 64; Registering 
trade marks in, 390. 

British Postal Guide— Study 
of, 69. 



423 



424 



INDEX 



Bureau of Foreign and Do- 
mestic Commerce — Branches 
of, 355; District offices of, 
353; Information supplied by, 
352; Object of, 349; Regular 
publications of, 351; Services 
rendered by, 349; Special 
bulletins of, 351; Trade op- 
portunity service offered by, 
354. 

Bureaus, Foreign Credit — Es- 
tablishing, 167. 

Bureau of War Risk Insur- 
ance — Establishment of, 261. 

Business — Basic principles of, 
160. 

Business, Export — Co-opera- 
tion for, 130-131; Creating:, 
177, 143, 201, 387, 299; Es- 
tablishing, 203 ; Financing, 
178; Foundations for, 331; 
Loss of, 198; Methods in, 204; 
Promotion of, 129. 

Buyer — Duty of commission 
house, 101; Reputation of, 
179. 

Cable— Use of, 30, 143, 146. 

Capital — Accessible, 24 ; De- 
mand for, 329; Extent of ac- 
tivities of, 6; Need for, 329; 
Supplying, 330. 

Cargo (Marine Insurance) — 
Insurance of, 190; Space for, 
158. 

Cartels — Activities of, 127; 
Character of, 127; Classes of, 
127; Creation of, 123; Growth 
of, 126; Importance of, 123; 
Information obtained by, 128. 

Catalogues — Appearance of, 
84; Appreciation of, 84; Ar- 
ticles from, 85; As essential 
media, 75; As interest creat- 
ing medium, 84; Careful 
mailing of, 88; Confidence in, 
85; Cost of, 88; Destination 
of export, 83; Discount sheets 
in, 86; Discriminate sending 
of, 88; Display by, 84; Dis- 
tribution of, 86; Duty of, 88; 
Explanations with, 86; Func- 
tions of, 86; Half tone cuts 
in, 85; Importance of, 84; 
Information in, 86; Language 
of, 83, 84; Making up foreign 
84; Packing, 89; Preparation 
of, 83 Quotations in, 87. 

Central Offices — Establish- 
ment of, 116. 



Certificate of Origin — Ad- 
vantages of, 239. 

Chamber of Commerce — Offer 
information, 29. 

Checks — Convenience of trav- 
ellers, 43. 

Chile — Duties in, 224; No 
licenses required in, 47. 

China — Duties in, 227; Trade 
marks in, 394. 

C. I. F. — Modern quotation, 
93, 97. 

Claims — Collecting, 199 ; Col- 
lecting marine insurance, 270 ; 
Filing of, 199; Handling, 
199. 

Clerk, Shipping — Duty of, 102. 

Clerk, Order — Must have good 
schooling, 33. 

Colombia — Commercial travel- 
lers in, 47; Duties in, 224. 

Combinations — Agreements of, 
141; Dealing with, 129; De- 
velopment of, 124; Drawbacks 
of, 123; Economies of, 140; 
Entering into, 116; Meeting 
128; Necessity of, 122; Pur- 
poses of, 115; Policy of or- 
ganizing, 124. 

Commerce — Statistics of for- 
eign, 115; Study of world, 
177. 

Commerce Reports — Supple- 
ments to, 350. 

Commission — Protection of 
Federal Trade, 141; Sales 
agents, 112. 

Commission House — Activities 
of export, 91; Advantages of 
export, 105; As indent mer- 
chant, 21; As middleman, 21; 
Buyers of, 28; Buyer for, 98; 
Confidence in, 95; Distinction 
of, 91; Equipment of, 96; 
Functions of, 21, 91; Handl- 
ing order in, 101; History of, 
21; In foreign commerce, 21; 
Limitations of, 103; Lines 
handled by, 99; Location, of, 
21, 97; Orders executed by, 
95, 21, 88; Operation of, 95; 
Organization of, 100; Pay- 
ments to, 96; Profits of, 97, 
132; Publications of, 80; Quo- 
tations of, 97; Salesmen of, 
100; Shipments by, 96; 
Strength of, 90. 

Company, Selling — Activities 
of, 23. 



INDEX 



425 



Company, Insurance — Func- 
tions of, 186. 

Company, Allied — Type, 23. 

Competition — Combating, 114, 
116, 117, 305, 130; Stifling, 
123; Unfair methods of, 118; 
Wastes of, 140. 

Conditions, Climatic — How 
they affect market, 4. 7. 

Conditions, Social — Deter- 
mines character of advertis- 
ing copy, 82. 

Conditions, Market — Knowl- 
edge of, 25, 41. 

Consignee — Symbol of, 227. 

Consignment — Contracting for, 
246. 

Consular Service (See Con- 
suls) — Pay of, 356; Person- 
nel of, 356; Principles of, 
358; Safeguarding, 357; Use 
of, 358. 

Consuls, American — Catalog- 
ues for, 88; Complaints of, 
67, 83; Directories in offices 
of, 80; Duties of, 49, 359; 
Effectiveness of, 357; Services 
of, 112, 355. 

Convention — Sixth National 
Foreign Trade, 29. 

Copy, Advertising (See Adver- 
tising) — Keynote of, 82; 
Kind of, 81; Use of, 81. 

Correspondence, Foreign — 
Blunders in, 61; Care exer- 
cised in translations in, 83, 
84; Courtesy, 59; Decreasing 
difficulties of, 59 ; Economy of, 
58; Exporting through, 59; 
Handling of, 58; Importance 
of, 58; Trade built up by, 
58. 

Costa Rica — Commercial trav- 
eler in, 47; Duties in, 225. 

Countries — Accounts in for- 
eign, 200; Common law group 
in trade mark, 392; Invest- 
ments in 328; Markets in, 
123 ; Trade mark registrations 
in code-law, 392; With which 
U. S. has parcel post agree- 
ments, 71. 

Cuba — Duties in, 225; No 
license required in, 47. 

Currency — Equivalents of for- 
eign, 87; Knowledge of inter- 
national, 87; Prices in Amer- 
ica, 87. 



Customers — Credits to foreign, 
133; Data regarding, 170; 
Dealing with foreign, 171, 
287; Insolvency of, 184; 
Standing of, 198. 

Credentials— Submitting, 277. 

Credit — Advantages of accept- 
ance, 288; Amounts of, 192; 
Asking for, 186; Conditions 
of, 280, 286, 287; Credit, con- 
firmed, 278, 279. 

Credit, Open — Confidence in, 
177. 

Credit, Revolving — Conven- 
ience of, 282. 

Credit — Extending, 131, 165, 
171, 174, 177, 186; Form of, 
281; Insurance of, 186; In- 
vestigating, 187; Length of, 
172; Necessity of, 174; Open- 
ing of, 278, 281, 283; Prob- 
lem of, 163; Refusing, 161, 
171, Safe-guarding, 189; Use 
of acceptance, 288; Use of 
commercial letter of, 280. 

Credit, Information — Method 
of obtaining, 165, 60, 101, 
178; Sources of, 167. 

Credit Insurance — Demand for 
183; Establishing, 196; Forms 
of, 192, 189. 

Data — Difficulty of obtaining, 
45; Method of obtaining credit 
169; Need of official, 28. 

Dates — Information as to sail- 
ing, 42. 

Deliveries — Problems of, 207. 

Denmark — Commercial travel- 
lers in, 45j Duties in, 226. 

Directory — Use of trade, 68; 
Aim of, 80; Destination of, 
80; Distribution of, 80; 
Forms of trade; 80; Names 
from trade, 88. 

Directory — Value of telephone, 
68. 

Discounts — System of, 142. 

Distances — From New York 
City, 71; Table of, 52. 

Distribution — Economies in, 
122; Expense in, 125; Meth- 
ods of, 78. 

Documents — Handling of ex- 
port, 102; Requirements of 
consular, 239. 

Dominican Republic — Commer- 
cial travellers in, 47. 



426 



INDEX 



Drafts (see Bill of Ex- 
CHANGE — Acceptance of, 288, 
290 ; Bank takes possession of 
102; Buying, 293; Charge for 
collecting, 291, 295, 296; 
Clauses in t 296; Discounting 
of foreign, 290; Drawing, 
291, 293j Financing, 28; 
Kinds of, 290; Meeting, 288; 
Methods of paying, 295; Ne- 
gotiating, 293; Quoting on, 
293; Payment of, 105; Pur- 
chase and sale of, 292, 293; 
Signature on, 294; Dumping, 
5. 

Duty — On samples, 44; Agree- 
ing to preference, 117. 

Ecuador — Commercial travel- 
lers in, 47; Duties in, 225. 

Edge Act — Contents of, 317; 
Principal purposes of, 316; 
Text of, 318. 

Enterprises — Investment in, 
127. 

Europe — Combination in, 123. 

Exchange — Expense involved 
in, 149; Rate of, 143, 197. 

Exporting — Careful handling 
of, 196; Selling methods in- 
volved in direct, 17; Subject 
of, 28. 

Export Department — Author- 
ity of, 27; Building an, 103 
Establishment of, 20, 28, 27 
Executive in charge of, 29 
Mailing list in, 68; Manager 
of, 31; Organization of, 24. 

Exporter — Interest of America, 
177; Library of, 361; Necess- 
ities of, 104; Penalizing, 104; 
Privilege of, 114. 

Expressions — Idiomatic, 65; 
Use of, idiomatic, 66. 

Factory — Readjustments neces- 
sary, 10. 

Far East Department — Indi- 
vidual conduct of, 92. 

Fees — Data on license, 45; De- 
termining consular, 238; Pay- 
ment of license, 46. 

Foreign Branch Office — Ad- 
vantages of, 99; Conduct of, 
99; Function of, 99; Services 
of, 94. 

Foreign Fields — Activities in, 
332; Progress in, 300; Suc- 
cess in, 122. 

Finance — Problems in, Inter- 
national, 44. 

F. O. B.— Shipments, 96. 



Foreign Branch — Establish- 
ment of, 19, 112; Expenses of, 
113; Regulations of, 113; 
Selling agency as, 112; Stock 
of, 113. 

Foreign Freight Forward- 
er — Charges of, 248. 

Foreign Trade Bureau — In- 
vestigations made by, 115. 

Forwarder — As middleman, 21. 

Forwarding Agent — Capital 
invested by, 245; Clients of, 
249; Expenses borne by, 246; 
Functions of, 22, 230, 248, 
244, 245, 249, 251. 

Foreign Exchange — Fluctua- 
tions of, 31; Knowledge of, 
44. 

France — Commercial travellers 
in, 45; Duties in, 226. 

Freight— Charges of, 218; Quo- 
tations on outward, 148. 

G. O. C. Permit — Issuance of, 
247. 

Goods — Arrival of, 159; Care 
of, 245; Character of, 145, 
308; Condition of, 235; Con- 
signing, 229; Damaged, 265; 
Delivery of, 146;; Double 
checking of, 221; Dumping 
of, 239; Paying for, 163, 179; 
Price of, 147 ; Quality of, 202 ; 
Sample of, 202; Selling, 304; 
Shipment of, 166, 197, 205, 
222; Terms of selling, 151; 
Title to, 233, 294; Transpor- 
tation of, 146; Weight of, 221, 
224. 

Government Department — To 
teach foreign trade, 35. 

Great Britain — Trade marks 
used in, 390. 

Greece — Commercial travellers 
in, 45. 

Guatemala— Duties in, 225; No 
license required in, 47. 

Haiti — Commercial travellers 
in, 48. 

History — Knowledge of, 41. 

Honduras — Commercial travel- 
lers in, 48; Duties in, 225. 

Iceland — Commercial travellers 
in, 45. 

Importer — Advantage to, 93; 
93; Confidence in, 163; In- 
structions from, 215; Orders 
from, 96; Settlement by, 163. 

Indent — Order received by com- 
mission house, 21; Represents 
order, 21. 



INDEX 



427 



Industry — Export trade in Am- 
erica, 133;. Organization of, 
129; Over production in, 133. 

Instructions — Difficulties of 
shipping, 28. 

Insurance — Cost of, 97; Ef- 
fecting, 190; Increasing, 190; 
Placing, 244; Prepayment of, 
147; Safeguard of, 191; Sys- 
tem of domestic credit, 193; 
Terms of, .179. 

Investment — Interest in, 113; 
Problem of international, 330. 

Invoice: — Completeness of, 49 ; 
Difference in consular, 237; 
Expenses enumerated in, 210; 
Features of, 208 ; Necessity of 
consular, 33; Obtaining con- 
sular, 236; Preparing consular 
239; Supplementing, 209; 
Value of, 143. 

Invoicing Department — Func- 
tion of, 102. 

Italy — Duties in, 226; Regula- 
tions of duty on samples in, 
45. 

Itinerary — Flexibility of, 42 ; 
Importance of, 42. 

Journal — Character of export 
trade, 76 j Circulation of 
trade, 76; Subscribers to ex- 
port trade, 76. 

Journals — Activities in Cuba, 
76; Advertisements in export 
trade, 96; Articles in export 
trade, 76; Circulation of ex- 
port trade, 80; Foreign local 
periodical, 75; Importance of, 
76; Leaders among trade, 77; 
Merits of export trade, 77; 
Status of export trade, 80; 
Study of American foreign 
trade, 19; Types of trade, 
75. 

Language — Employment of, 
proper, 64; Courtesy in, 62; 
Expert in foreign, 39; Fam- 
iliarity with foreign, 34; 
Knowledge of, 30, 41; Use of, 
238; Use of commercial, 62; 
Use of customer's own, 83. 

Latin-America — Spanish in, 
64; Trade mark registration 
in, 395; Trade problems in, 
29. 

Letters — Copies of, 67; Import- 
ance of, 43. 

Letterheads — In Domestic cor- 
respondence, 68 ; Offensive, 
68. 



Letter of Credit — Lesser cost 
of, 43. 

Letter of Introduction — Ne- 
cessity of, 43; Use of, 49. 

Library — Necessity of, 28. 

Loans — Placing, 330 ; Sound- 
ness of, 331. 

Machinery — Packing, 220. 

Magazines — Subscribing to ex- 
port, 28. 

Mailing Lists — Foreign pros- 
pects on, 68; Trade Journals 
distributed to, 76. 

Mails — Frequency of, 334; Use 
of, 167. 

Manager — Application of do- 
mestic sales, 26; Authority of 
branch, 98; Competency of 
branch, 93; Duties of foreign 
branch, 99; Employing ex- 
port, 26; Instructions to gen- 
eral, 116; Opportunity of ex- 
port, 28. 

Manufacturer — Charges 
against American, 170; Con- 
fidence in exporting, 207; 
Foresight of, 202; Responsi- 
bility of, 231. 

Manufacturers — Combination 
of, 51; Co-operation with, 
131; Criticism of American, 
165; Quotations from, 143; 
Representing American, 116. 

Marine Insurance — Clauses in 
254, 258; Contract in, 259; 
Cost of, 93; Declaring values 
under, 266; Fluctuations of 
rates in, 145; General aver- 
age in, 263; Kinds of, 145; 
Obtaining, 96 ; Particular 
average in, 264 ; Principles of, 
253; Profit of, 267; Protection 
offered by, 261; Taking out, 
261, 102. 

Markets — Agencies in foreign, 
132; American merchants in 
foreign, 275; Character of, 
77, 78; Combinations in de- 
veloping foreign, 122; Com- 
peting in alien, 129; Condi- 
tions in foreign, 133; Con- 
quering, 202; Control of, 114; 
Creating, 125, 132; Demand 
in, 133; Developing, 124, 
128; Experimentations in, 
27; Locations in, 111; Prob- 
lems in, 114; Review of, 363; 
Search for, 163; Studying, 
164. 



428 



INDEX 



Media — Anaylsis of, 75; Value 
of Advertising, 77. 

Merchandise — Loading, 243 ; 
Quality of, 122; Title to, 286; 
Weight of, 223. 

Merchant Marine — Assistance 
of, 333; Development of, 347; 
Efficiency of, 124; Future of 
American, 344;; Government 
owned, 346; Growth of, 335; 
History of, 338; Need for, 
299; Object of, 334; Private- 
ly owned, 347; Schedule of 
American, 337. 

Merchants — Activity of ex- 
port, 91. 

Merchants, Export — As mid- 
dlemen, 21, 22; Bona fide, 
93; Branch offices of, 93; 
Business of, 92, 97; Location 
of, 92; Original policy of, 
91; Profits of, 132; Purchase 
of, 94. 

Metric System — Familiarity 
with, 33. 

Mexico — Commercial travelers 
in, 48; Duties in, 225. 

Middlemen — Usefulness of, 
90. 

Motion Pictures — American 
industry visualized by, 81; 
As essential media, 75; Field 
for, 81; Successful, 81. 

National Foreign Trade 
Council — Reports of, 28. 

Netherlands — Commercial 
travelers in, 45; Duties in, 
226. 

Newspapers — Kinds of, 77 ; 
Use of, 78; Use of foreign, 
78. 

New Zealand — Commercial 
travelers in, 49. 

Nicaragua* — Commercial trav- 
elers in, 48; Duties in, 225. 

Norway — Duties in, 226; Trad- 
ing license required in, 45. 

Official Postal Guide — In- 
formation in, 67; Valuable in- 
formation in, 69. 

Order Department — Sends or- 
ders to factories, 32; Passes 
upon orders, 32. 

Orders — Filling, 204; Receiv- 
ing, 160, 278; Accepting, 205; 
Alloting, 137, 141; Handling 
export, 205, 206; Interpreta- 
tion of, 206; Loss of, 215; 
Shipment of, 203. 



Organizations — Joint selling, 
141; Trade, 169. 

Packages — Damaged, 235; 
Handling, 228; Measurement 
of, 149; Size of, 236; Weight 
of, 69, 149. 

Packing — Character of, 218; 
Charge for, 12, 86; Contents 
listed in, 200; Directing of, 
28; Economy in, 218; Effic- 
iency in, 216; Factors in, 215j 
221, False economy in, 212; 
Ignorance of, 213; Kinds of, 
222; Methods of, 81, 216, 222, 
212, 217; Negligence in, 211; 
Poor, 214; Regulations in, 
224; Requirements of, 213; 
Weight of, 223. 

Panama — Commercial travelers 
in, 48; Duties in, 225. 

Pan-American Union 

Paraguay — Commercial travel- 
ers in, 48; Duties in, 225. 

Parcel Post — Advantages en- 
joyed by British through, 
69; Advantages of, 69; 
Agreement on, 70; Confer- 
ence on, 69; Countries open 
to shipment by, 69; Difficult- 
ies in exporting by, 70; Ex- 
tension of, 70; Foreign trade 
through, 69; Markets reach- 
ed by, 69; Packing for, 69; 
Use of, 69. 

Passports — Importance of, 43. 

Permit — Clause in shipping, 
231. 

Peru — Commercial travelers in, 
48; Duties in, 225. 

Pilferage — Covering risk of, 
33. 

Population — Importance of, 
16. 

Ports — Character of, 221; 
Charges at, 145; Delivery at 
foreign, 147; Location of, 
16. 

Portugal — Duties in, 226. 

Postage — Cost of underpaid, 
67. 

Prices — Determining policy of, 
4; Intelligent way to quote, 
38; Meeting cut, 122; Method 
of quoting, 40 ; Obtaining low- 
est, 101; Quoting, 133, 142, 
150; Schedule of, 138. 

Production — Economies in, 
122; Improvement of, 187; 
Surplus, 176. 



INDEX 



429 



Publications — Information 
from foreign, 77; Leading 
trade, 360; Standards of 
trade, 79. 

Publicity — Necessity of, 398; 
Science of, 74. 

Quotations — Avoiding c.a.f., 
149; Efficiency of c.i.f., 146; 
Explanation of c.i.f., 93; 
Risks of f.o.b, 146; Steam- 
ship, 148; Intelligent, 150; 
Limiting, 145; New Methods 
of making, 152; Reforms on 
making, 152 ; Use of language 
in, 63; Liability in, 146. 

Rates — Changing freight, 93 ; 
Fluctuation in freight, 145; 
Information regarding postal 
67; Knowledge of insurance, 
148; Stability in exchange, 
163; Advertising, 77. 

Receipts — Contents of dock, 
232; Feature of parcel, 236. 

Reports — Incompleteness of for- 
eign credit, 169; Information 
in credit, 169; Competence of 
credit, 168. 

Republics of Czechoslovakia 
— Trademark law in, 392. 

Risks — Advantages of credit, 
20; Avoiding credit, 110; 
Character of, 191; Covering, 
262; Judging mercantile, 195. 

Routes — Information as to, 42. 

Sailings — Frequency of, 334. 

Salesman — Advantages of 
combination, 51; Authority 
of traveling, 111; Character 
of traveling, 111; Credentials 
of, 42; Employing, 131; Ex- 
pense of traveling, 44, 95; 
Experiences of combination, 
50; Functions of traveling, 
86; Lines carried by combina- 
tion, 51; Operations of, 100; 
Operations of combination, 
49; Opportunities of, 108; 
Plans of combination, 51; 
Preliminary work of, 41, 42; 
Propositions of combination, 
50; Qualifications of combina- 
tion, 50; Responsibility of 
traveling, 36; Services of, 
49; Use of traveling, 18; 
Where to send, 30; Training 
of, 132. 

Salvador — Commercial traveler 
in, 48; Duties in, 226. 



Samples — Data on duties on, 
45; Expenses increased by, 
44. 

Schemes — Questionable adver- 
tising, 79. 

Selling — Methods in, 140; Sys- 
tem of, 130. 

Settlement — Demanding, 198, 
199. 

Ships — Measuring capacity of, 
348. 

Shipments — Controlling, 285; 
Destination of, 229; Econ- 
omies in, 122; Methods of, 
144; Return of, 203; Settle- 
ment for, 137; Clearance of, 
237; Delayed, 277, 130. Fi- 
nancing, 289. 296, 300; Handl- 
ing, 230; Methods of financ- 
ing, 275; Packing for, 222; 
Surtax on, 238. 

Shippers Export Declara- 
tion — Presentation of, 232 ; 
Preparation of, 232; Attest- 
ing, 232. 

Shipping — Advantages in, 129; 
Dependence on foreign, 130; 
Difficulty in, 229; Experience 
in, 30; Method of, 229; Prog- 
gress of American, 346; 
Sharing charges of, 117. 

Ships— Condition of, 235; Qual- 
ity of American-built, 346; 
Use of, 333. 

Shipyards — Output of Amer- 
ican, 345; Work in American, 
345. 

Signature — Importance of writ- 
ten, 63; Rubber stamp, 63; 
Typewritten, 63. 

Spain — Commercial travelers in 
46; Duties in, 227. 

Special Export Edition — Ad- 
vantages of, 79; Use of, 79; 
Waning popularity of, 79. 

Specialties — Field for, 131. 

Standing Credit — Investiga- 
tion of, 24, 101; Judging of, 
168. 

Stationery — Good taste in, 
68; Quality of, 68. 

Symbols — Qualifying, 144; 
Use of, 144, 227. 

Sweden — Commercial travelers 
46; Duties in, 227. 

Switzerland — Commercial trav- 
elers in, 46; Duties in, 227. 

Tariff — Preferential, 116; Par- 
agraphs of, 33; Requirements 
of, 32. 



430 



INDEX 



Technique — Export, 29; Study 

of export, 150. 
Terms — Cash, 175; Necessity of 

set, 158. 
Territory — Limited, 112. 

Trade — Authorities on, 87 ; 
Building American foreign, 
114; Cash terms in export,. 
276; Character of export, 
130; Combination in foreign, 
114, 117; Competing for, 117; 
Damage to American foreign, 
215; Demands of, 132; De- 
velopment of, 128, 132, 148, 
164; Engaging in foreign, 
299; Expansion of, 362; Fac- 
ilitating, 159 ; Financing, 
274; Growth of American ex- 
port, 164, 95; Handicaps of 
American export, 312; Mid- 
dlemen in export, 90; Organ- 
ization for export, 130, 179; 
Permanency, 201; Policy of, 
124; Problems of foreign, 80; 
Quotations in export, 144. 

Trademarks — Establishment of 
international, 395; Bureau of, 
396; Piracy of, 388, 389; 
Protection of, 389, 393; 
Theory of, 392, 395. 



Translations — Purpose of, 66; 
Style of, 67; Efficiency in 
making, 84; Obtaining prop- 
er, 64; Perfection of, 84. 

Translators — Qualifications of 
competent, 65; Views of pro- 
fessional, 65; Classes of, 65; 
Need of competent, 65. 

Transportation — Conditions in 
216. 

Underwriters — History of 253. 

United Kingdom — Commercial 
Travelers in, 46. 

United States Bureau of For- 
eign and Domestic Com- 
merce — Publication of, 28. 

United States Department of 
Commerce— 68. 

Uruguay — Commercial travel- 
ers in, 48; Duties in, 226. 

Venezuela — Commercial trav- 
elers in, 48; Duties in, 226. 

Warehouses — Establishment 
of, 131. 

Webb-Pomerene Law — Concern 
caused by, 114; Criticism of, 
114; Defense of, 114; Effect 
of, 115; Power conferred by, 
124; Provisions of, 114; Re- 
sults of, 122; Summarized ad- 
vantages of, 121; Teeth in, 
118; Text of, 118. 



<k 



